Soumya Eswaran
5 min read
In This Article:
Baron Funds, an investment management company, released its “Baron Discovery Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund was down 6.17% (Institutional Shares), outperforming the -11.12% return for the Russell 2000 Growth Index. The market began strong in February but faded due to Trump's serious tariff enactment, which the market perceives as inflationary and slowing economic growth. The decline accelerated after April 2nd, causing fears of a trade war and global recession. 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 Discovery 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 -7.30%, and its shares gained 9.84% of their value over the last 52 weeks. On May 19, 2025, Arcellx, Inc. (NASDAQ:ACLX) stock closed at $58.51 per share with a market capitalization of $3.22 billion.
Baron Discovery Fund stated the following regarding Arcellx, Inc. (NASDAQ:ACLX) in its Q1 2025 investor letter:
"We initiated a small position in Arcellx, Inc. (NASDAQ:ACLX), a biotechnology company that together with Gilead Sciences, Inc. is developing a next-generation CAR-T cell therapy it calls “Anito-cel” for the treatment of multiple myeloma. While we generally do not invest in emerging biotechnology companies, we took a small position in Arcellx given that the market is large and proven (currently a $3.5 billion opportunity that could expand to $12 billion or more over time), and that we believe Arcellx has a safer CAR-T therapy than the currently approved solution. Moreover, the company has over $600 million of net cash on its balance sheet and a favorable manufacturing agreement with Gilead. We believe that this combination makes the company more than fully funded through profitability.
