Multiple Tailwinds Lifted Eli Lilly and Company (LLY) in Q4

Baron Funds, an investment management company, released its fourth-quarter investor letter for the “Baron Health Care Fund”. A copy of the letter can be downloaded here. The fund rose 13.10% (Institutional Shares) in the quarter, compared to a 11.92% gain for the Russell 3000 Health Care Index (benchmark) and a 2.40% gain for the Russell 3000 Index (the Index). The Fund returned 10.28% for the full year, compared to 14.56% and 17.15% gains for the indexes, respectively. Strong stock selection in biotechnology contributed to the Fund’s relative gains in the quarter.  The Fund seeks to invest in businesses with secular growth opportunities, a sustainable competitive edge, and strong management. The firm believes that healthcare is a strong sector in the U.S. economy, offering attractive investment opportunities with positive momentum heading into 2026.  Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Health Care Fund highlighted Eli Lilly and Company (NYSE:LLY) as one of its leading contributors. Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company headquartered in Indianapolis, Indiana. The one-month return of Eli Lilly and Company (NYSE:LLY) was -4.02%, and its shares gained 16.23% of their value over the last 52 weeks. On February 5, 2026, Eli Lilly and Company (NYSE:LLY) stock closed at $1,020.84 per share, with a market capitalization of $915.139 billion.

Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its fourth quarter 2025 investor letter:

"Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company currently best known for its GLP-1 treatments for diabetes and obesity. Shares rose during the quarter as Zepbound’s obesity launch continued to gain strong traction. In addition, investors welcomed the announcement of an agreement with the Trump administration that expands Medicare and Medicaid coverage for Lilly’s obesity drugs, offers lower pricing through Medicaid, and supports continued U.S. drug manufacturing investment. In exchange, Lilly was excluded from any near-term “Most Favored Nations” drug pricing programs or pharmaceutical sector tariffs, improving regulatory certainty. Long term, we view Lilly’s Mounjaro and Zepbound GLP-1/GIP therapies, along with orforglipron, its oral GLP-1, as transformational for diabetic and non-diabetic obese patients, and we expect this drug class to become the standard of care for both diabetes and obesity, ultimately representing a $150 billion-plus market opportunity. In our view, GLP-1 adoption is still in its early innings, and we believe continued uptake will drive a doubling of Lilly’s total revenues by 2030."

Eli Lilly and Company (NYSE:LLY) is in 21st position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 114 hedge fund portfolios held Eli Lilly and Company (NYSE:LLY) at the end of the third quarter, compared to 119 in the previous quarter. Eli Lilly and Company (NYSE:LLY) delivered strong results in 2025, with revenue rising 45% to $65.2 billion and fourth-quarter revenue grew 43%. While we acknowledge the potential of Eli Lilly and Company (NYSE:LLY) 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 Eli Lilly and Company (NYSE:LLY) and shared the list of best long term low risk stocks to buy. In addition, please check out our hedge fund investor letters Q4 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.