Baron Discovery Fund recently published its fourth-quarter commentary – a copy of which can be downloaded here. During the fourth quarter of 2020, the Baron Discovery Fund returned 25.54% (institutional shares). This was 4.07% lower than the Russell 2000 Growth Index, the Fund’s primary benchmark index. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, Baron Discovery Fund highlighted a few stocks and CareDx Inc. (NASDAQ:CDNA) is one of them. CareDx Inc. (NASDAQ:CDNA) develops, markets, and delivers a diagnostic surveillance solution for heart transplant recipients. In the last three months, CareDx Inc. (NASDAQ:CDNA) stock gained 75.3% and on February 1st it had a closing price of $80.24. Here is what Baron Discovery Fund said:
“CareDx, Inc. is the market leader in transplant diagnostics, with presence in nearly all U.S. and EU centers. Shares were up 91% in the fourth quarter as the company continued to successfully execute on its growth strategy. The company’s flagship product is DNA oriented testing to determine whether a transplanted kidney is being subjected to biological rejection. This is a $2 billion market, and we estimate that for 2020 CareDx did about $128 million in total kidney testing revenue, up about 72% year-over-year from $74 million in 2019. What is astonishing is that CareDx had only $28 million in revenues for this product in 2018. Even with the level of growth the company had in 2020, we estimate that the company was only mid-teens penetrated into the kidney opportunity at year-end. And CareDx also has market opportunities in pre-transplant human leukocyte antigen (HLA) typing (a $500 million market opportunity), heart transplant testing (a $100 million market, which is likely to expand with a new total HeartCare product from the company that received favorable CMS reimbursement in November) and lung transplant (a product with $50 million to $100 million in opportunity). Further out on the horizon is a new test called AlloCell, which is a surveillance test for patients who have received engineered-cell transplants made from other peoples’ cells (allogenic) to monitor the effectiveness and persistence of the transplanted cells. CareDx believes that its cell therapy applications have an incremental $5 billion market so it would be very exciting if it develops as management expects.”
In Q2 2020, the number of bullish hedge fund positions on CareDx Inc. (NASDAQ:CDNA) stock increased by about 35% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in CareDx’s growth potential. Our calculations showed that CareDx Inc. (NASDAQ:CDNA) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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