Baron Funds, an investment management company, released its “Baron Health Care Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 2.54% (Institutional Shares) in the quarter compared to a 3.87% gain for the Russell 3000 Health Care Index (benchmark) and a 4.72% decline for the Russell 3000 Index (the Index). The fund trailed the benchmark due to stock selection and, to a lesser extent, active sub-industry weights. 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 Health Care Fund highlighted stocks such as Arcellx, Inc. (NASDAQ:ACLX). Headquartered in Redwood City, California, Arcellx, Inc. (NASDAQ:ACLX) engages in the development of various immunotherapies for patients with cancer and other incurable diseases. The one-month return of Arcellx, Inc. (NASDAQ:ACLX) was -4.56%, and its shares gained 15.63% of their value over the last 52 weeks. On May 9, 2025, Arcellx, Inc. (NASDAQ:ACLX) stock closed at $57.55 per share with a market capitalization of $3.17 billion.

Baron Health Care Fund stated the following regarding Arcellx, Inc. (NASDAQ:ACLX) in its Q1 2025 investor letter:

"Arcellx, Inc. (NASDAQ:ACLX) is developing cell therapies for multiple myeloma, including lead drug anito-cel in partnership with Gilead. Shares detracted from performance. The stock had run up as investors anticipated positive news ahead of results released in early December from a pivotal iMMagine-1 trial. Despite encouraging data showing that anito-cel is as efficacious as Legend/ Johnson & Johnson’s CARVYKTI with fewer side effects, shares then fell on fears of any new safety signals as Arcellx conducts additional trials. We think anito-cel is meaningfully differentiated on safety, and new data readouts will support this conclusion. We expect a mid-year update on trial results, which could be the basis for potential approval and launch in the second half of 2026."Arcellx, Inc. (ACLX): Among Takeover Rumors Hedge Funds Are Buying

A scientist in a lab coat examining a microscope, looking at the details of the biotechnology company's immunotherapies.

Arcellx, Inc. (NASDAQ:ACLX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Arcellx, Inc. (NASDAQ:ACLX) at the end of the fourth quarter which was 32 in the previous quarter. While we acknowledge the potential of Arcellx, Inc. (NASDAQ:ACLX) 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 cheapest AI stock.

Story Continues

In another article, we covered Arcellx, Inc. (NASDAQ:ACLX) and shared takeover rumors that have prompted hedge funds to buy stocks. Baron healthcare fund initiated a position in Arcellx, Inc. (NASDAQ:ACLX) during Q2 2023, focusing on cell therapy’s potential for multiple myeloma care. In Q1 2024, the fund increased its stake, but Arcellx, Inc. (NASDAQ:ACLX) dropped in Q2 2024 due to lack of news and competitor programs. However, Arcellx, Inc. (NASDAQ:ACLX) surged in Q3 2024, as its iMMagine-1 trial data for late-line multiple myeloma was confirmed for presentation at the American Society for Hematology conference later this year. In Q4 2024, the fund again increased its stake in Arcellx, Inc. (NASDAQ:ACLX), driven by its accelerated growth trajectory. 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.

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