Top performing Healthcare & Biotech Hedge Funds share convictions for top stock opportunities

September 22nd, 2014
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A recent analysis of the top long-term performing Healthcare, Pharma & Biotech Hedge Funds has revealed that the top funds share a number of the same top investment ideas.

The top four hedge funds include Viking Global Investors, Glenview Capital Management, Visium Asset Management LLC and Ratan Capital Management. To make the list, the hedge funds had to be ranked on:

(1) Barron’s Best 100 Hedge Funds List, which required a 3 year Compound Annual Return of at least 12.25% through the end of 2013

(2) Hedge Tracker’s Top 50 Healthcare, Pharma & Biotech Hedge Fund List, which only includes funds that have more than 35% of their U.S. equity assets invested in Healthcare, Pharma and Biotech companies as of 6/30/2014

At the end of Q2, all of the top Healthcare hedge funds, with the exception of Ratan Capital, held an equity stake in Thermo Fisher Scientific (TMO). Combined, the three hedge funds hold approximately $2.3 billion in the analytical instruments and laboratory equipment company. Larry Robbins’ Glenview Capital has the largest stake, having reported holdings of 10.9 million shares in TMO. TMO’s stock is up 11.4% year-to-date, and ended the week at $123.24. Equity analysts have the stock’s one year target estimate at $143.07, according to Yahoo, highlighting TMO’s upside potential.

Valeant Pharmaceuticals (VRX) and Allergan Inc (AGN) have also attracted the attention of the top Healthcare hedge funds, with Viking Global, Visium and Ratan Capital holding stakes. Earlier this year, VRX implemented a “poison pill” to deter a takeover attempt by AGN, which was being embarked on in partnership with Bill Ackman's Pershing Square Capital.

Combined, the top three hedge funds hold a total of $1.6B in VRX, with Viking’ stake accounting for $1.49B of the total. Their combined holdings in AGN are valued at $631M, with Visium’s stake accounting for $409M of the total.

AGN’s stock has had a stellar year so far, having seen its stock price jump 51.4% YTD, ending the week at $168.21. Equity analysts have the stock’s one year target estimate at $200.60, according to Yahoo, making me bullish on the stock’s prospects.

Endo International (ENDP) is another favorite of the top funds, with Glenview, Visium and Ratan all holding stakes. Combined, the three hedge funds hold approximately $636M in the specialty pharmaceutical company. So far, ENDP’s stock is only up 0.4% year-to-date, ending the week at $67.70. Equity analysts have ENDP’s one year target estimate at $75.55, according to Yahoo, highlighting a potential buying opportunity.

Glenview Capital, Viking Global, and Visium are also holders of Wellpoint Inc (WLP), holding stakes of $489M, $103M and $12M, respectively. WLP’s stock has had a strong year so far, having seen its stock price jump 32.1% YTD, ending the week at $122.04. Equity analysts have the stock’s one year target estimate at $118.87, according to Yahoo. While I don’t have WLP as a buy, I would reconsider it if it dips below $110.

Finally, while Walgreens Inc. (WAG) is not exactly a healthcare company, all four of the top hedge funds have a stake in the large drug retailing chain. Combined, the top funds hold approximately $1.8B in WAG, with Viking Global accounting for $1.5B. WAG’s stock is up 9.5% year-to-date, ending the week at $62.88. Equity analysts have the stock’s one year target estimate at $71.50, according to Yahoo, highlighting a buying opportunity.
For Detailed Investor Profiles on these Investors, click below:
Glenview Capital Management
Pershing Square Capital Management
Viking Global Investors
Visium Asset Management LLC
Related People: Andreas Halvorsen; Brian Olson*; David Ott; Jacob Gottlieb; Larry Robbins; Nicholas Botta; Roy J. Katzovicz; Scott Ferguson*; William 'Bill' Ackman
Related Entities: Catalyst Investment Management ; Visium Credit Opportunities Fund; Visium Global Fund; Visium Long Bias Fund LP; GCM Little Arbor Institutional Partners; GCM Little Arbor Master; GCM Little Arbor Partners; Glenview Capital Master; Glenview Capital Partners; Glenview Institutional Partners; Leucadia Corporation (NYSE: LUK); Pershing Square Capital; Pershing Square IV; Pershing Square LP; Tiger Management*; Viking Global Equities; Viking Global Equities III; Viking Global Investors LP; Visium Balanced Fund
Related Article Tags: Investment Management, Fund Manager and General Financial News; Top Hedge Fund Portfolio Reports


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