Baron Funds, an investment management company, released its “Baron Asset Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. After a strong start to 2025, U.S. equities dropped sharply in late February, with most broad market indexes finishing the quarter down mid- to high single digits. Initially, investors were optimistic about the economy during President Trump’s second term. However, market sentiment shifted due to Trump’s plans for sweeping tariffs on key U.S. trade partners. Additionally, investors tempered their enthusiasm for AI beneficiaries, leading to a sell-off in the Magnificent Seven and other companies within the AI ecosystem. Against this backdrop, Baron Asset Fund had a robust first quarter, returning -2.89% (Institutional Shares) compared to the Russell Midcap Growth Index’s -7.12% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Asset Fund highlighted stocks such as West Pharmaceutical Services, Inc. (NYSE:WST). West Pharmaceutical Services, Inc. (NYSE:WST) designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products. The one-month return of West Pharmaceutical Services, Inc. (NYSE:WST) was 3.82%, and its shares lost 32.51% of their value over the last 52 weeks. On June 12, 2025, West Pharmaceutical Services, Inc. (NYSE:WST) stock closed at $224.91 per share with a market capitalization of $16.159 billion.
Baron Asset Fund stated the following regarding West Pharmaceutical Services, Inc. (NYSE:WST) in its Q1 2025 investor letter:
“West Pharmaceutical Services, Inc. (NYSE:WST) is a leading manufacturer of drug packaging components and delivery systems for injectable drugs. Although management expects the core business to perform well in 2025, shares fell on setbacks in two other areas of the business. First, West declined to renew two contracts in its contract manufacturing business due to unfavorable economics. We would note that, compared to the core business, the contract manufacturing business is low margin and low value. Second, some high margin 2024 revenue with a large customer for West’s Smart Dose On-Body Delivery System will not repeat in 2025. As a result, 2025 earnings guidance was materially below investor expectations. While we are disappointed with the re-set, we think earnings can grow at a mid-teens rate from this new level.”
A closeup of multiple drug containment systems in an array of colors.
West Pharmaceutical Services, Inc. (NYSE:WST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held West Pharmaceutical Services, Inc. (NYSE:WST) at the end of the first quarter, which was 35 in the previous quarter.While we acknowledge the potential of West Pharmaceutical Services, Inc. (NYSE:WST) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered West Pharmaceutical Services, Inc. (NYSE:WST) and shared Artisan Mid Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of WST as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
