Baron Discovery Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2021, the Baron Discovery Fund returned 6.07% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.55%, while the Russell 2000 Growth Index was up 3.92%. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q2 2021 Investor Letter, the fund highlighted a few stocks and Veracyte Inc. (NASDAQ:VCYT) is one of them. Veracyte Inc. (NASDAQ:VCYT) is a genomic diagnostics company. In the last three months, Veracyte Inc. (NASDAQ:VCYT) stock gained 56%. Here is what the fund said:
“Veracyte, Inc. is a medical diagnostics company specializing in the characterization of thyroid, lung, breast, and urological cancers. In our opinion, Veracyte has the highest-quality (or in some cases, only) tests for these indications in the market. The company’s tests help to qualify with a high degree of accuracy whether a patient with suspicious initial medical findings (from a needle aspiration for thyroid, or CT scan for lung cancer) needs to be followed up with a higher risk, expensive invasive medical procedure such as a full-tissue biopsy. Newer tests will catch cancer activity at very early stages, allowing for better outcomes. The company is also building an extensive database of complex genetic findings to better aid the accuracy of its results. Since our initial investment in Veracyte in the middle of 2019, the company has been busy enhancing its product base and extending its growth markets. It acquired an analyzer platform at the end of 2019 that will let it sell its tests as kits in the EU, which has a more fragmented lab landscape than the U.S. New test kits for the analyzer are expected to launch at the end of 2021. The company also acquired a urological testing franchise for bladder, kidney, and prostate cancers in early 2021 that adds an additional $2 billion to its market opportunity. Finally, in mid-2021 Veracyte bought a company that brings EU manufacturing capability to support the EU test kit strategy, with additional capabilities in the colorectal cancer space (another $2 billion market opportunity). The purchase was funded with a $630 million equity raise (done at market high share prices). In total, Veracyte has positioned itself to address over $14 billion in total market opportunity, including $8.4 billion in lung, $800 million in thyroid, $900 million in breast, $2 billion in urology and $2 billion in colorectal cancer. We believe that shares were down in the quarter due to the news that Bonnie Anderson, the highly esteemed founder and CEO of Veracyte, announced that she will be stepping down as CEO but willremainasChairmanofthecompany.WespokewithBonnieandthenew CEO, Mark Stapley soon after the announcement. We believe that Mark is a terrific hire as he has significant industry experience, particularly in the role of building out international organizations. His pedigree includes a role as CFO of Illumina, the leading next-generation DNA sequencing systems developer. Bonnie will retain a key strategic role at the company. We believe shares will recover as Veracyte shows increased penetration into all of its market opportunities, and that other investors are being incredibly short-sighted given the company’s terrific strategic execution over the past few years.”
In Q1 2021, the number of bullish hedge fund positions on Veracyte Inc. (NASDAQ:VCYT) stock increased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in VCYT’s growth potential. Our calculations showed that Veracyte Inc. (NASDAQ:VCYT) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.