The healthcare sector is one that has been performing very well in the short, but also medium and long-term. Over the last 52 weeks, healthcare stocks returned on average 24.53%, being outrun only by the real estate sector, which appreciated by roughly 25%. In this way, investors that have bet on healthcare stocks managed to collect significant profits from both consolidation of the sector caused by mergers & acquisitions and from some new developments and discoveries in the portfolios of healthcare companies.
Our data for the fourth quarter of 2014, shows that funds that we track have bet on more than 250 healthcare companies, while among the most popular stocks have been large-cap companies or companies that have been acquisition targets. Billionaires also did not stay clear from healthcare companies during the fourth quarter, and disclosed long positions in over 60 companies in the latest round of 13F filings. Among the most popular stocks on which billionaires have been most bullish on is Allergan, Inc. (NYSE:AGN), as well as the company that is currently pursuing its acquisition: Actavis plc (NYSE:ACT). Moreover billionaires also bet on pharmaceutical retailer Walgreens Boots Alliance Inc (NASDAQ:WBA), hospital operator HCA Holdings Inc (NYSE:HCA) and on biotech stocks, with Gilead Sciences, Inc. (NASDAQ:GILD) also making the top five list.
Allergan, Inc. (NYSE:AGN) and Actavis plc (NYSE:ACT) are the most popular healthcare stocks among investors. Aside from being two of the most popular stocks among billionaires, both companies have also been the most popular healthcare stocks among hedge funds. At the end of the fourth quarter, 19 billionaire investors reported holding shares of Allergan, Inc. (NYSE:AGN) and 18 billionaire-managed funds held shares of Actavis. Earlier in November, Allergan entered into a deal to be acquired by Actavis for $66 billion. The deal managed to overturn the plans of famous activist investor Bill Ackman, who also tried to acquire Allergan together with Valeant Pharmaceuticals for approximately $60 billion. Nevertheless, the talks about the potential acquisition of Allergan, Inc. (NYSE:AGN) sent the stock rallying throughout the second half of 2014 and led to a significant increase in the popularity of the stock among investors. On the other hand, Actavis plc (NYSE:ACT), being one of the top healthcare companies, has always been one of the favorite stocks of equity investors.
Even though Bill Ackman did not succeed in acquiring Allergan, Inc. (NYSE:AGN), the deal with Actavis plc (NYSE:ACT) made the billionaire manager of Pershing Square one of the biggest winners, since his fund held around 26.64 million shares of Allergan. In addition to him, billionaire Daniel S. Och of OZ Management owns shares of both Allergan and Actavis, which represent the two largest stakes in his fund’s equity portfolio as of the end of 2014. Billionaires Larry Robbins, Dan Loeb, and George Soros also decided to take advantage of the merger and initiated new stakes in Allergan during the fourth quarter of 2014. In addition all three billionaires have raised their exposure to Actavis plc (NYSE:ACT) during the October-December period, among others.
Next on the list is hospital and heathcare facilities operator HCA Holdings Inc (NYSE:HCA) in which 15 billionaires disclosed long equity positions, including Larry Robbins and Stephen Mandel, who held 6.18 million shares and 5.84 million shares respectively, Mandel initiating a stake during the fourth quarter. On the other hand, among the over 700 funds that we track, HCA Holdings Inc (NYSE:HCA) has seen a decrease in popularity, with 80 funds reporting long positions, versus 90 funds in the previous quarter. HCA Holdings Inc (NYSE:HCA)’s stock gained around 40% during the last year, on the back of a strong financial performance. Analysts are also optimistic about the company’s prospects, as a couple of days ago, Oppenheimer and Credit Suisse set price targets of $84 and $81 respectively, both with ‘Buy’ ratings. In addition, at last year’s “Alpha Delivering Conference” Larry Robbins said that HCA Holdings is one of the stocks that he likes because the company is able to buy debt at low interest and use the proceeds to engage in activities that provide more value to shareholders such as dividends and buybacks.
Walgreens Boots Alliance Inc (NASDAQ:WBA), an $86 billion pharmaceutical retailer, was also not overlooked by billionaire investors, as 13 funds reported holding shares of the company. At the end of last year, Walgreens Co. completed its merger with Switzerland-based Alliance Boots GmbH. The new company, Walgreens Boots Alliance Inc (NASDAQ:WBA) has exposure to markets in 25 countries and operates around 12,800 stores. The stock gained around 5% since the new company started trading on the NASDAQ, and among its shareholders are Andreas Halvorsen’s Viking Global, which held 18.93 million shares at the end of 2014, and Barry Rosenstein‘s JANA Partners, which reported ownership of 13.75 million shares of Walgreens Boots Alliance Inc (NASDAQ:WBA), representing one of the top picks in the equity portfolios of both funds.
The biotech sector was also on the radar of billionaires with Gilead Sciences, Inc. (NASDAQ:GILD) being one of the favorite stocks among billionaire investors. A total of 12 funds managed by billionaires disclosed long equity positions as of the end of 2014. Among all funds that we track, Gilead Sciences, Inc. (NASDAQ:GILD) has also seen an increase in popularity, as 97 funds reported holding shares, versus 81 funds in the previous quarter. The company managed to post impressive gains during 2014 with its revenue for the third quarter surging to $6.04 billion from $2.78 billion in the previous quarter and EPS jumping to $1.67 from $0.47.
Among funds that we track, the largest shareholder of Gilead Sciences, Inc. (NASDAQ:GILD) is Cliff Asness’ AQR Capital Management, which raised its stake by 114% over the quarter to 4.83 million shares. Billionaire Jim Simons’ Renaissance Technologies added the company to its equity portfolio during the fourth quarter and reported ownership of 941,400 shares in its latest 13F filing.
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