Should You Consider Adding Penumbra (PEN) To Your Portfolio?

Baron Funds, an investment management company, released its “Baron Health Care Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 2.54% (Institutional Shares) in the quarter compared to a 3.87% gain for the Russell 3000 Health Care Index (benchmark) and a 4.72% decline for the Russell 3000 Index (the Index). The fund trailed the benchmark due to stock selection and, to a lesser extent, active sub-industry weights. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as Penumbra, Inc. (NYSE:PEN). Headquartered in Alameda, California, Penumbra, Inc. (NYSE:PEN) designs and manufactures medical devices. The one-month return of Penumbra, Inc. (NYSE:PEN) was 6.03%, and its shares gained 36.01% of their value over the last 52 weeks. On May 8, 2025, Penumbra, Inc. (NYSE:PEN) stock closed at $288.73 per share with a market capitalization of $11.181 billion.

Baron Health Care Fund stated the following regarding Penumbra, Inc. (NYSE:PEN) in its Q1 2025 investor letter:

"We initiated a position in Penumbra, Inc. (NYSE:PEN), a leading manufacturer of medical devices that remove blood clots from veins and arteries. Physicians use the company’s devices to treat pulmonary embolism (PE), deep vein thrombosis (DVT), acute limb ischemia, ischemic stroke, coronary disease, and other conditions. Penumbra’s devices, which are called mechanical thrombectomy devices, use computer algorithms to modulate the aspiration power depending on if a clot is detected and to control a separate valve that injects saline to reduce friction between the clot and catheter. This enables a differentiated device profile that maximizes clot removal with speed while decreasing risk of blood loss.

Penumbra serves large and underpenetrated markets. Management estimates the U.S. thrombectomy market opportunity consists of roughly 1.25 million annual procedures, including roughly 200,000 in stroke and over 1 million in PE, DVT, arterial, and coronary. The PE and DVT markets are only 10% penetrated with mechanical thrombectomy devices. Most PE patients currently receive conservative medical management with oral anticoagulation alone. Penumbra is running randomized clinical trials studying mechanical thrombectomy versus anticoagulation for PE patients. If the trials are positive, the market could shift towards greater adoption of mechanical thrombectomy. Meanwhile, Penumbra is gaining market share in PE and DVT. In stroke, the company’s new Thunderbolt device, which incorporates its computer assisted vacuum thrombectomy technology into the stroke market for the first time, could receive FDA approval and launch later this year, providing a potential catalyst for growth."

Penumbra, Inc. (NYSE:PEN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Penumbra, Inc. (NYSE:PEN) at the end of the fourth quarter which was 27 in the previous quarter. In the first quarter of 2025, Penumbra, Inc. (NYSE:PEN) reported revenue of $324.1 million, marking year-over-year increase of 16.3% on a reported basis and 16.9% on a constant currency basis. While we acknowledge the potential of Penumbra, Inc. (NYSE:PEN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In addition, please check out our hedge fund investor letters Q1 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.