Baron Funds, an investment management company, released its “Baron Health Care Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund increased by 9.08% (Institutional Shares) compared to an 11.54% gain for the Russell 3000 Health Care Index and a 7.56% gain for the S&P 500 Index. The fund fell 16.90% in 2022, compared to a 6.10% decline for the Russell 3000 Health Care Index and an 18.11% decline for the S&P 500 Index. Factors like cash exposure in the up-market, adverse stock selection, and differences in sub-industry exposures led the fund to underperform in the quarter relative to its benchmark. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Baron Funds highlighted stocks like Option Care Health, Inc. (NASDAQ:OPCH) in the Q4 2022 investor letter. Headquartered in Bannockburn, Illinois, Option Care Health, Inc. (NASDAQ:OPCH) provides home infusion services. On January 30, 2023, Option Care Health, Inc. (NASDAQ:OPCH) stock closed at $28.27 per share. One-month return of Option Care Health, Inc. (NASDAQ:OPCH) was -6.05%, and its shares gained 20.97% of their value over the last 52 weeks. Option Care Health, Inc. (NASDAQ:OPCH) has a market capitalization of $5.142 billion.
Baron Funds made the following comment about Option Care Health, Inc. (NASDAQ:OPCH) in its Q4 2022 investor letter:
“We initiated a position in Option Care Health, Inc. (NASDAQ:OPCH), the largest independent player in the $15 billion U.S. home and alternate site infusion market. We believe Option Care is well positioned to capitalize on the ongoing shift to lower-cost sites of care and the proliferation of new specialty drug treatments. Home infusions cost 40% to 70% less than infusions at a hospital. Option Care’s footprint, with over 150 locations, allows it to serve roughly 96% of the U.S. population in a market growing 5% to 7% a year. The company has a well-diversified portfolio of therapies and provider relationships with no customer concentration, enjoys in-network status with all larger payors, and has low direct government reimbursement risk as Medicare currently does not cover home infusion. We estimate the market would double if this were to occur in the future. Given its geographic coverage and therapeutic expertise, the company is assured a seat at the table to discuss new innovative episodic or fully capitated models with payors. It also has strong relationships with relevant drug manufacturers, facilitating early access to newly approved drugs and preferred supply arrangements, while its size and scale provide purchasing power. Management believes the company can continue to generate high single-digit organic revenue growth and mid-teens EBITDA growth. There is also an opportunity to enhance growth through M&A. The company has an excellent track record of acquiring and integrating acquisitions and, with 45% of its market still made up of regional and local providers, there is a meaningful consolidation opportunity.”
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Option Care Health, Inc. (NASDAQ:OPCH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Option Care Health, Inc. (NASDAQ:OPCH) at the end of the third quarter, which was 32 in the previous quarter.
We discussed Option Care Health, Inc. (NASDAQ:OPCH) in another article and shared the list of healthcare stocks to invest in according to Stanley Druckenmiller. In addition, please check out our hedge fund investor letters Q4 2022 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.