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Baron Capital, an investment management company, released its Q2 2026 investor letter for the "Baron Health Care Fund". A copy of the letter is available to download here. The Fund gained 11.99% during the quarter, compared with the 10.48% gain for the Russell 3000 Health Care Index and the 15.44% gain for the Russell 3000 Index. Since inception, the Fund appreciated 10.61% on an annualized basis, compared with 10.02% for the Benchmark and 14.83% for the Index. Strong stock selection in pharmaceuticals, biotechnology, health care equipment, and life sciences tools and services supported the Fund's outperformance, although limited exposure to managed care stocks reduced relative returns. The Fund remains positive on health care due to improving biotechnology funding, strong acquisition activity, recovering managed care margins, and growth from an aging population, chronic disease, medical innovation, and higher health care spending. In addition, please check the Fund's top five holdings to know the best picks in 2026.

In its second-quarter 2026 investor letter, Baron Health Care Fund highlighted Gilead Sciences, Inc. (NASDAQ:GILD). Gilead Sciences, Inc. (NASDAQ:GILD), a biopharmaceutical company that discovers, develops, and commercializes medicines for unmet medical needs, detracted from the fund's performance during the quarter. On August 03, 2026, Gilead Sciences, Inc. (NASDAQ:GILD) closed at $131.15 per share. The one-month return of Gilead Sciences, Inc. (NASDAQ:GILD) was -3.82%, and its shares gained 16.62% over the past 52 weeks. Gilead Sciences, Inc. (NASDAQ:GILD) has a market capitalization of $162.83 billion.

Baron Health Care Fund stated the following regarding Gilead Sciences, Inc. (NASDAQ:GILD) in its Q2 2026 investor letter:

"Biotechnology company Gilead Sciences, Inc. (NASDAQ:GILD) is best known for developing and commercializing therapies that treat and prevent HIV. Following a strong first-quarter advance driven by continued enthusiasm surrounding the launch of Yeztugo for HIV prevention, the stock detracted from performance in the second quarter. Shares pulled back after management issued conservative 2026 guidance in February, including expectations for approximately $800 million of Yeztugo sales, below investor expectations. Despite the more cautious outlook, we remain confident in Yeztugo's long-term opportunity. Unlike Descovy, a daily oral preventive treatment, Yeztugo is a twice-yearly injectable therapy that has the potential to significantly improve patient compliance. Looking ahead, we continue to view Gilead as a leader in HIV treatment and prevention, with Yeztugo representing an important new preventive option and a promising next-generation pipeline that includes a weekly oral lenacapavir and islatravir combination being developed with Merck & Co., Inc., as well as a wholly-owned weekly regimen incorporating a novel integrase inhibitor designed to offer a higher barrier to resistance."

Gilead Sciences, Inc. (NASDAQ:GILD) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 77 hedge fund portfolios held Gilead Sciences, Inc. (NASDAQ:GILD) at the end of the first quarter which was 71 in the previous quarter. While we acknowledge the potential of Gilead Sciences, Inc. (NASDAQ:GILD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Gilead Sciences, Inc. (NASDAQ:GILD) and shared the list of most profitable cheap stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 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.