Here's Why Welltower (WELL) Surged in Q1

Baron Funds, an investment management company, released its “Baron Real Estate Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, stocks were sold due to economic growth slowdown, inflation, and policymaking issues, including Baron Real Estate Fund®, without considering value. The fund declined 6.69% (Institutional Shares) in the quarter compared to a 3.11% decline for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index) and a 0.76% gain for the MSCI US REIT Index (the REIT Index). 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 Real Estate Fund highlighted stocks such as Welltower Inc. (NYSE:WELL). Welltower Inc. (NYSE:WELL) is a REIT that drives the transformation of healthcare infrastructure. The one-month return of Welltower Inc. (NYSE:WELL) was -2.63%, and its shares gained 42.05% of their value over the last 52 weeks. On May 14, 2025, Welltower Inc. (NYSE:WELL) stock closed at $143.40 per share with a market capitalization of $93.777 billion.

Baron Real Estate Fund stated the following regarding Welltower Inc. (NYSE:WELL) in its Q1 2025 investor letter:

"Shares of Welltower Inc. (NYSE:WELL) continued to significantly outperform both the REIT and broader equity indices. We believe Welltower offers both “offensive” and “defensive” investment attributes in the current uncertain macroenvironment. Welltower is an operator of senior housing, life science, and medical office real estate properties. Given most of the company’s cash flows are derived from senior housing, “defensive” characteristics are underpinned by a “needs based” service offering. Welltower owns senior housing properties in some of the best micro-markets with substantial pricing power given the company serves a higher net worth demographic.

As we have articulated in the past, we remain optimistic about the prospects for both cyclical growth (a recovery from depressed occupancy levels following COVID-19) and secular growth (seniors are the fastest growing portion of the population and people are living longer) in senior housing demand against a backdrop of muted supply that will lead to many years of compelling organic growth. Several of these characteristics were on display in the most recent quarter as Welltower continued to report above industry rent and occupancy growth. We regard management as highly astute capital allocators and able to go on “offense” at the appropriate time, which was further cemented with the recently announced C$4.6 billion acquisition of Amica, an ultra-luxury irreplaceable portfolio in Canada, which was accretive to existing shareholders, acquired well-below replacement cost, and enhanced the overall quality of the portfolio."

Welltower Inc. (NYSE:WELL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held Welltower Inc. (NYSE:WELL) at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the potential of Welltower Inc. (NYSE:WELL) 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 undervalued AI stock set for massive gains.

In another article, we covered Welltower Inc. (NYSE:WELL) and shared the list of best-performing real estate stocks. 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.