Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Health Care Fund”. A copy of the letter is available to download here. Baron Health Care Fund (the Fund) declined 6.97% (Institutional Shares) in the quarter, compared to the 4.88% decline for the Russell 3000 Health Care Index (the Benchmark) and the 3.96% decline for the Russell 3000 Index (the Index). The Fund appreciated 9.39% on an annualized basis since its inception, compared to the 8.97% gain for the Benchmark and the 13.26% gain for the Index. The disappointing stock selection drove the Fund’s underperformance in the quarter. Despite recent challenges, the Fund believes the long-term outlook for health care remains positive due to factors including an aging population, rising chronic disease rates, advances in biotechnology, and increased health care spending. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Health Care Fund highlighted Eli Lilly and Company (NYSE:LLY). Eli Lilly and Company (NYSE:LLY) is a leading pharmaceutical company headquartered in Indianapolis, Indiana, that develops, manufactures, and markets human pharmaceutical products. On April 28, 2026, Eli Lilly and Company (NYSE:LLY) closed at $874.00 per share. One-month return of Eli Lilly and Company (NYSE:LLY) was -8.44%, and its shares lost 2.78% over the past 52 weeks. Eli Lilly and Company (NYSE:LLY) has a market capitalization of $780.79 billion.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q1 2026 investor letter:
“Eli Lilly and Company (NYSE:LLY), a global pharmaceutical company currently best known for its GLP-1 treatments for diabetes and obesity, detracted from performance. Following a robust fourth quarter of 2025, shares declined after competitor Novo Nordisk launched its oral Wegovy ahead of Lilly’s oral launch in April 2026. Early prescription trends for oral Wegovy have been strong, prompting investor concerns about potential cannibalization of injectable obesity medications and the possibility of price cuts from Novo Nordisk igniting a price war. Novo Nordisk currently offers introductory cash-pay rates on the starting doses ($149 for oral, $199 for injectable), but patients can only access these promotional prices for two months, the discounts apply only to low starting doses that do not drive meaningful weight loss, and most patients ultimately titrate to higher-priced maintenance doses. Longer term, we continue to view Lilly’s Mounjaro and Zepbound, along with its oral GLP-1 orforglipron, as best-in-class treatment options for diabetic and obese patients. We expect GLP 1 therapies to become the standard of care and to represent a $150-billion-plus market opportunity.”
Eli Lilly and Company (NYSE:LLY) ranks 16th on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 137 hedge fund portfolios held Eli Lilly and Company (NYSE:LLY) at the end of the fourth quarter, up from 114 in the previous quarter. Eli Lilly and Company (NYSE: LLY) reported impressive results for 2025, with a 45% year-over-year revenue increase to $65.2 billion and a 43% revenue growth in the fourth quarter. While we acknowledge the risk and potential of Eli Lilly and Company (NYSE:LLY) 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 Eli Lilly and Company (NYSE:LLY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Eli Lilly and Company (NYSE:LLY) and shared the list of best growth stocks to buy and hold in 2026. In addition, please check out our hedge fund investor letters Q1 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.
