What Makes RadNet (RDNT) an Investment Bet?

Baron Funds, an investment management company, released its “Baron Small Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2025, the fund was down 9.07% (Institutional Shares) compared to the Russell 2000 Growth Index’s (the Index) -11.12% return. Small-cap stocks continued to underperform larger market caps meaningfully, so the Fund lagged the Russell 3000 Index, which fell 4.72% in the quarter. 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 Small Cap Fund highlighted stocks such as RadNet, Inc. (NASDAQ:RDNT). Headquartered in Los Angeles, California, RadNet, Inc. (NASDAQ:RDNT) provides outpatient diagnostic imaging services. The one-month return of RadNet, Inc. (NASDAQ:RDNT) was 12.63%, and its shares lost 3.30% of their value over the last 52 weeks. On May 23, 2025, RadNet, Inc. (NASDAQ:RDNT) stock closed at $56.61 per share with a market capitalization of $4.247 billion.

Baron Small Cap Fund stated the following regarding RadNet, Inc. (NASDAQ:RDNT) in its Q1 2025 investor letter:

“During the quarter, we bought shares of RadNet, Inc. (NASDAQ:RDNT), the largest owner and operator of fixed-site, freestanding diagnostic imaging centers in the U.S, with 399 locations. The company’s imaging centers offer multi-modality imaging services, including magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), and other related procedures. The company develops leading positions in regional markets to leverage operational efficiencies and contracting benefits with health plans. Currently, the company has a strong regional presence in California, Maryland, New York, and New Jersey.

RadNet is benefiting from several secular growth trends. The aging population is driving increased demand for diagnostic imaging services. Payors are steering volume to less costly outpatient providers like RadNet, away from higher cost hospitals, and patients prefer the experience of care in an outpatient setting over a hospital. New technology is driving higher demand for more advanced imaging modalities like MRI, CT and PET, all of which generate higher revenue and margin per procedure for RadNet…” (Click here to read the full text)

RadNet, Inc. (RDNT): “Let’s Take a Pass” Says Jim Cramer

A radiologist studying a monitor with a detailed image of a lung cancer tumor.

RadNet, Inc. (NASDAQ:RDNT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held RadNet, Inc. (NASDAQ:RDNT) at the end of the fourth quarter which was 29 in the previous quarter. RadNet, Inc. (NASDAQ:RDNT) reported revenue of $471.4 million, an increase of 9.2% year-over-year. While we acknowledge the potential of RadNet, Inc. (NASDAQ:RDNT) 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 RadNet, Inc. (NASDAQ:RDNT) and shared Baron Health Care 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.

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Disclosure: None. This article is originally published at Insider Monkey.