Core Insights - Baron Health Care Fund reported a 5.39% gain in Q3 2025, slightly outperforming the Russell 3000 Health Care Index which gained 5.05% [1] - The fund's performance was impacted by poor stock selection in life sciences tools & services and pharmaceuticals, particularly due to Waters Corporation's underperformance [3] Fund Performance - The Baron Health Care Fund's Institutional Shares rose 5.39% in Q3 2025, compared to an 8.18% gain for the Russell 3000 Index [1] - Solid stock selection was offset by negative impacts from active sub-industry allocations and cash holdings during a rising market [1] Waters Corporation Analysis - Waters Corporation (NYSE:WAT) had a one-month return of 8.56% but saw a 10.74% decline over the past 52 weeks, closing at $345.59 with a market cap of $20.571 billion [2] - The fund exited its position in Waters Corporation due to concerns that its acquisition of Becton, Dickinson's biosciences and diagnostics assets would dilute growth and margins, fundamentally changing the investment thesis [3] Hedge Fund Interest - Waters Corporation was held by 37 hedge fund portfolios at the end of Q2 2025, an increase from 33 in the previous quarter [4] - Despite its potential, the company is not considered among the top investment choices compared to certain AI stocks that are perceived to offer greater upside potential [4]