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 McKesson Corporation (NYSE:MCK). McKesson Corporation (NYSE:MCK) offers healthcare services through U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International segments. The one-month return of McKesson Corporation (NYSE:MCK) was 0.07%, and its shares gained 25.04% of their value over the last 52 weeks. On May 9, 2025, McKesson Corporation (NYSE:MCK) stock closed at $693.46 per share with a market capitalization of $86.683 billion.

Baron Health Care Fund stated the following regarding McKesson Corporation (NYSE:MCK) in its Q1 2025 investor letter:

"Minimally offsetting the above was strength in health care distributors attributable to a combination of stock selection and active exposure to this strong performing sub-industry. Recent addition McKesson Corporation (NYSE:MCK), a leading distributor of pharmaceutical/medical supplies and provider of prescription technology solutions that connect pharmacies, providers, payers, and biopharmaceutical customers, led the way in health care distributors. We discuss why we re-established a position in McKesson in the Recent Activity section below.

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Jim Cramer on McKesson (MCK): "Defying Doubters as a Middleman Money Machine"

A successful pharmacist in front of shelves of drugs in a community-based oncology pharmacy.

McKesson Corporation (NYSE:MCK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 78 hedge fund portfolios held McKesson Corporation (NYSE:MCK) at the end of the fourth quarter compared to 57 in the third quarter. While we acknowledge the potential of McKesson Corporation (NYSE:MCK) 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.

In another article, we covered McKesson Corporation (NYSE:MCK) and shared the list of Jim Cramer recently discussed. 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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