What Makes Welltower (WELL) an Attractive Investment?

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 Welltower Inc. (NYSE:WELL) as a new addition to the portfolio. Welltower Inc. (NYSE:WELL) is a healthcare REIT that focuses on rental housing for aging seniors. On February 5, 2026, Welltower Inc. (NYSE:WELL) stock closed at $191.06 per share. One-month return of Welltower Inc. (NYSE:WELL) was 2.68%, and its shares are up 33.99% over the past twelve months. Welltower Inc. (NYSE:WELL) has a market capitalization of $131.13 billion.

Baron Health Care Fund stated the following regarding Welltower Inc. (NYSE:WELL) in its fourth quarter 2025 investor letter:

"We bought shares of Welltower Inc. (NYSE:WELL), a healthcare REIT which owns and operates senior housing and medical office buildings in the U.S. and internationally. We believe Welltower is well-positioned to benefit from the favorable secular trends in the senior housing industry, most notably the supply/demand imbalance for senior housing. Underlying demand is supported by a demographics boom with the over 80 population growing at a 4% to 5% CAGR over the next five years versus annual growth below 2% coming out of the 2008 financial crisis. There is scarce new supply of senior housing due to unattractive developer economics, and there is a five-plus year timeline to entitle and build a new project. In addition, we believe there is upside opportunity with respect to both operating margins and occupancy through enhanced asset management, employing proprietary data analytics and introducing initiatives such as amenity-based pricing. Welltower has recruited top senior executives from the multi-family space to execute and deploy these initiatives that will drive operating margins and occupancy beyond typical industry levels. Further, the current capital constrained financing environment for senior housing with loans either coming due and/or interest rate caps coming off assets acquired during a period of low interest rates should provide an active and growing external growth pipeline where management will be able to invest at an attractive “cost basis” below replacement cost. Finally, management recently agreed to an “all in” compensation program which reflects their confidence in the shareholder value creation opportunity over the coming decade. The company’s five named executive officers agreed to receive no other compensation for the period from 2026 through 2035 other than $110,000 of annual base salary and a single, long-term equity-based incentive award in the form of units of the company’s operating partnership. Management has an impressive track record creating shareholder value and their willingness to go “all in” gives us even greater confidence investing with them."

Welltower Inc. (NYSE:WELL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 52 hedge fund portfolios held Welltower Inc. (NYSE:WELL) at the end of the third quarter, compared to 56 in the previous quarter. While we acknowledge the potential of Welltower Inc. (NYSE:WELL) 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 Welltower Inc. (NYSE:WELL) and shared a list of best dividend stocks that outperform the S&P 500. 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.