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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 Veradermics, Incorporated (NYSE:MANE). Veradermics, Incorporated (NYSE:MANE), a clinical-stage biopharmaceutical company developing treatments for pattern hair loss in adults and children, contributed to the Fund's performance during the quarter. On August 03, 2026, Veradermics, Incorporated (NYSE:MANE) closed at $101.89 per share. The one-month return of Veradermics, Incorporated (NYSE:MANE) was -13.05%. Veradermics, Incorporated (NYSE:MANE) has a market capitalization of $4.26 billion.

Baron Health Care Fund stated the following regarding Veradermics, Incorporated (NYSE:MANE) in its Q2 2026 investor letter:

"Veradermics, Incorporated (NYSE:MANE), a dermatologist founded, late clinical-stage biopharmaceutical company developing VDPHL01, an extended-release oral minoxidil tablet for pattern hair loss. In April, the company reported solid Phase 3 data in male pattern hair loss. The drug demonstrated robust hair growth with up to 63% of male patients reporting improved hair coverage compared to just 13% on placebo. We await data from a second Phase 3 study of VDPHL01 in male pattern hair loss and the first clinical data from a Phase 2 study of VDPHL01 in female pattern hair loss patients, both expected in the second half of 2026. If VDPHL01 is U.S. Food and Drug Administration (FDA) approved, we think it will be uniquely positioned as the first FDA-approved oral treatment in several decades for a condition affecting 80 million Americans."

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Veradermics, Incorporated (NYSE:MANE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Veradermics, Incorporated (NYSE:MANE) at the end of the first quarter which was 0 in the previous quarter. While we acknowledge the potential of Veradermics, Incorporated (NYSE:MANE) 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 Veradermics, Incorporated (NYSE:MANE) and shared a bullish thesis on the company. 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.