Baron Capital, an investment management company, released its Q2 2026 investor letter for the “Baron Health Care Fund”. A copy of the letter is available to download here. The Fund gained 11.99% during the quarter, compared with the 10.48% gain for the Russell 3000 Health Care Index and the 15.44% gain for the Russell 3000 Index. Since inception, the Fund appreciated 10.61% on an annualized basis, compared with 10.02% for the Benchmark and 14.83% for the Index. Strong stock selection in pharmaceuticals, biotechnology, health care equipment, and life sciences tools and services supported the Fund’s outperformance, although limited exposure to managed care stocks reduced relative returns. The Fund remains positive on health care due to improving biotechnology funding, strong acquisition activity, recovering managed care margins, and growth from an aging population, chronic disease, medical innovation, and higher health care spending. In addition, please check the Fund’s top five holdings to know best picks in 2026.
In its second-quarter 2026 investor letter, Baron Health Care Fund highlighted Revolution Medicines, Inc. (NASDAQ:RVMD) as a new addition. Revolution Medicines, Inc. (NASDAQ:RVMD) is a clinical-stage precision oncology company that develops novel targeted therapies for RAS-addicted cancers. On August 3, 2026, Revolution Medicines, Inc. (NASDAQ:RVMD) closed at $182.45 per share. The one-month return of Revolution Medicines, Inc. (NASDAQ:RVMD) was -4.21% and its shares gained 375.25% over the past 52 weeks. Revolution Medicines, Inc. (NASDAQ:RVMD) has a market capitalization of $38.79 billion.
Baron Health Care Fund stated the following regarding Revolution Medicines, Inc. (NASDAQ:RVMD) in its Q2 2026 investor letter:
“We added to our position in Revolution Medicines, Inc., a biotechnology company developing medicines to treat cancers driven by rat sarcoma (RAS) mutations. The company estimates there are 190,000 new cancer diagnoses each year in the U.S. that are driven by RAS mutations, including approximately 60,000 patients with non-small cell lung cancer, 75,000 patients with colorectal cancer, and 56,000 patients with pancreatic cancer. In April, the company released topline results from its RASolute 302 trial in which patients with advanced pancreatic cancer who received the company’s medicine Daraxonrasib in the second line had a median overall survival of 13.2 months compared to 6.7 months for the patients who received chemotherapy. Subsequently at the annual meeting of the American Society of Clinical Oncology (ASCO), the clinical trial investigators presented the full data which confirmed the groundbreaking results. In this patient population, Daraxonrasib reduced the risk of death by 60% compared with chemotherapy. The presentation at ASCO received a standing ovation, which is rare in oncology and even rarer in pancreatic cancer. Daraxonrasib represents the first major advance in pancreatic cancer in over 30 years. Also, during the quarter, the company announced encouraging data from two earlier stage trials of Daraxonrasib in first-line (previously untreated) pancreatic cancer patients. The company is also studying Daraxonrasib in non-small cell lung cancer and other solid tumors and has other drugs in development, including combination therapies, for each of these cancers. When Daraxonrasib is FDA approved later this year, we think the demand will be strong, leading to rapid adoption. We think the company’s leadership position in this category will be difficult to displace, and ultimately, we think the company could generate peak sales over $20 billion.”
Revolution Medicines, Inc. (NASDAQ:RVMD) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held Revolution Medicines, Inc. (NASDAQ:RVMD) at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of Revolution Medicines, Inc. (NASDAQ:RVMD) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Revolution Medicines, Inc. (NASDAQ:RVMD) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Revolution Medicines, Inc. (NASDAQ:RVMD) and shared a list of best non-AI stocks to buy according to billionaire Stanley Druckenmiller. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
