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 stocks like Natera, Inc. (NASDAQ:NTRA). Natera, Inc. (NASDAQ:NTRA) is a diagnostics company specializing in the development and commercialization of molecular testing services. On April 28, 2026, Natera, Inc. (NASDAQ:NTRA) closed at $200.17 per share. One-month return of Natera, Inc. (NASDAQ:NTRA) was -1.50%, and its shares gained 32.62% over the past 52 weeks. Natera, Inc. (NASDAQ:NTRA) has a market capitalization of $28.58 billion.
Baron Health Care Fund stated the following regarding Natera, Inc. (NASDAQ:NTRA) in its Q1 2026 investor letter:
“We reacquired shares of Natera, Inc. (NASDAQ:NTRA), a diagnostics company that provides testing services in the oncology, prenatal, and organ transplant settings. We are particularly excited about the promise of Natera’s Signatera minimal residual disease (MRD) tests, which account for half of the company’s revenues today and are the company’s key growth driver. Signatera tests for any evidence of cancer cell DNA in a patient’s blood and can be used to: 1) stratify patients and guide therapy decisions after surgical tumor removal; 2) monitor how patients respond to treatment; and 3) detect early cancer recurrence. Signatera is the leading test in the MRD category and has been proven to meaningfully affect patient outcomes in colorectal cancer, breast cancer, bladder cancer, and to monitor immunotherapy response. Natera continues to invest in clinical studies to prove Signatera’s clinical value in additional treatment settings. In particular, we expect Signatera growth to benefit from recently published/presented data in muscle-invasive bladder cancer and head and neck squamous cell carcinoma. We also anticipate Signatera to launch in Japan following reimbursement for colorectal cancer testing, which could drive significant growth in 2027 and beyond given the large patient population. Further, Natera continues to defend its leadership position by expanding its MRD test offerings, including launching their whole genome sequencing-based test and the tumor-naïve Latitude test. Overall, we think MRD testing can be a $20 billion market as oncologists continue to adopt these tests and as its clinical utility is proven in more settings, and we are bullish that Natera will continue to hold its leadership position.”
Natera, Inc. (NASDAQ:NTRA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 74 hedge fund portfolios held Natera, Inc. (NASDAQ:NTRA) at the end of the fourth quarter, up from 70 in the previous quarter. While we acknowledge the risk and potential of Natera, Inc. (NASDAQ:NTRA) 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 Natera, Inc. (NASDAQ:NTRA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Natera, Inc. (NASDAQ:NTRA) and shared the list of best diagnostics and research stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
