Strong Investor Reception of IPO Boosted Heartflow (HTFL) in Q3

Baron Funds, an investment management company, released its “Baron Health Care Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund rose 5.39% (Institutional Shares) in the quarter, compared to a 5.05% gain for the Russell 3000 Health Care Index (benchmark) and an 8.18% gain for the Russell 3000 Index (the Index). The Fund performed similarly to the Benchmark this quarter. Solid stock selection was primarily offset by negative effects from active sub-industry allocations and cash holdings during a rising market. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as Heartflow, Inc. (NASDAQ:HTFL). Heartflow, Inc. (NASDAQ:HTFL) is a medical technology company that offers non-invasive solutions for diagnosing and managing coronary artery diseases. The one-month return of Heartflow, Inc. (NASDAQ:HTFL) was -2.70%. On November 3, 2025, Heartflow, Inc. (NASDAQ:HTFL) stock closed at $34.04 per share, with a market capitalization of $2.839 billion.

Baron Health Care Fund stated the following regarding Heartflow, Inc. (NASDAQ:HTFL) in its third quarter 2025 investor letter:

“Investments in health care services and health care technology also added value, with outpatient diagnostic imaging centers operator RadNet, Inc. and AI-driven coronary artery disease management platform Heartflow, Inc. (NASDAQ:HTFL) leading the way in these sub-industries. Heartflow’s shares performed exceptionally well after the company’s August IPO was well received by investors. The company’s solution provides a minimally invasive way to diagnose blockages in the heart vessels, reducing both false negatives and false positives relative to the standard of care today. The company has a strong competitive moat, with a repository of 110 million images supplemented by human-aided training that has taken over 10 years to build. We like the asset-light nature of the business, along with the margin expansion opportunity as the AI algorithm improves with scale and data, enabling Heartflow to reduce the number of employee hours involved in real-time workflows. Heartflow has over 600 peer-reviewed publications, its solution has been approved by the FDA, and its core product has 99% insurance coverage. We remain excited about Heartflow’s prospects given the company is in the early innings of its growth ramp.”

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Heartflow, Inc. (NASDAQ:HTFL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of Heartflow, Inc. (NASDAQ:HTFL) 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 Heartflow, Inc. (NASDAQ:HTFL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Heartflow, Inc. (NASDAQ:HTFL) and shared the list of AI stocks to watch out for in 2025. In addition, please check out our hedge fund investor letters Q3 2025 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.