Baron Funds, an investment management company, released its “Baron Health Care Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund declined 5.06% (Institutional Shares) in the quarter, against a challenging backdrop for the broader Health Care sector, compared to a 6.19% decline for the Russell 3000 Health Care Index (benchmark) and a 10.99% gain for the Russell 3000 Index (the Index). In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as Exact Sciences Corporation (NASDAQ:EXAS). Exact Sciences Corporation (NASDAQ:EXAS) provides cancer screening and diagnostic test products. The one-month return of Exact Sciences Corporation (NASDAQ:EXAS) was -12.29%, and its shares lost 19.18% of their value over the last 52 weeks. On July 30, 2025, Exact Sciences Corporation (NASDAQ:EXAS) stock closed at $46.80 per share, with a market capitalization of $8.828 billion.
Baron Health Care Fund stated the following regarding Exact Sciences Corporation (NASDAQ:EXAS) in its second quarter 2025 investor letter:
“We initiated a position in Exact Sciences Corporation (NASDAQ:EXAS), a molecular diagnostics company focused on the early detection of colorectal cancer. The company is best known for its non-invasive colorectal cancer stool tests, Cologuard and Cologuard Plus. 106 million adults in the U.S. are eligible for colorectal cancer screening, of which half are not up to date. Colonoscopies are the gold standard for colorectal cancer screening, but they are invasive and require significant preparation. In contrast, Cologuard is non-invasive and requires significantly less time commitment. Cologuard adoption is growing and the test now accounts for around 13% of colorectal cancer screening. We are increasingly hearing from doctors and patients that they are considering Cologuard ahead of colonoscopies. Shares underperformed in 2024 as adoption of Cologuard slowed, as investors anticipate competition from Guardant Health which launched a colorectal cancer blood test, and as investors feared a worst-case outcome from a Supreme Court case that potentially has implications for insurance coverage mandates for Cologuard. We think shares are well positioned to re-rate as each fear is dispelled: (1) we expect Exact Science’s commercial restructuring to continue to drive volume growth reacceleration; (2) Guardant’s blood test is less sensitive than Cologuard and we think blood tests will be relegated to patients who refuse more sensitive screening options; and (3) at the end of June, the Supreme Court issued its decision in the Braidwood case which preserved the insurance coverage mandate. We think Cologuard is a compelling option for colorectal cancer screening and Exact Sciences will continue to penetrate this market.”
A research team in a laboratory discussing the results of a lab screening test for biomarkers.
Exact Sciences Corporation (NASDAQ:EXAS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held Exact Sciences Corporation (NASDAQ:EXAS) at the end of the first quarter, which was 49 in the previous quarter. Exact Sciences Corporation’s (NASDAQ:EXAS) first quarter revenue experienced 11% rise on reported and core basis exceeding the mid pint of guidance over $19 million. While we acknowledge the risk and potential of Exact Sciences Corporation (NASDAQ:EXAS) 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 EXACT SCIENCES CORPORATION (NASDAQ:EXAS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Exact Sciences Corporation (NASDAQ:EXAS) and shared the best mid cap pharma stocks to buy. In addition, please check out our hedge fund investor letters Q2 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.
