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Is Alector (ALEC) a Smart Long-term Buy?

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Alex Smith
·3 min read
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Baron Health Care Fund recently published its third-quarter commentary – a copy of which can be downloaded here. During the third quarter of 2020, the Baron Health Care Fund returned 11.64% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.93%, while the Russell 3000 Health Care Index was up 6.48%. You should check out Baron’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Baron Health Care Fund highlighted a few stocks and Alector Inc. (NASDAQ:ALEC) is one of them. Alector Inc. (NASDAQ:ALEC) operates as a clinical stage biopharmaceutical company. Year-to-date, Alector Inc. (NASDAQ:ALEC) stock lost 12.7% and on December 10th it had a closing price of $15.04. Here is what Baron Health Care Fund said:

"Alector, Inc. is a biotechnology company focused on neurodegeneration. The stock fell after an update given at a medical conference called AAIC. In essence, the company had hoped to present a decent amount of clinical data for its lead asset in frontotemporal dementia, but due to COVID-19-related clinical trial delays, it ended up presenting less data than promised. This underpowered dataset was equivocal in its findings and left the Street disappointed."

Doctor Specialties with Best Lifestyle
Doctor Specialties with Best Lifestyle

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In Q2 2020, the number of bullish hedge fund positions on Alector Inc. (NASDAQ:ALEC) stock increased by about 93% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Alector's growth potential. Our calculations showed that Alector Inc. (NASDAQ:ALEC) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.