Biotech Hedge Fund Deerfield Management’s Top Stock Picks

Next in line is Allergan, Inc. (NYSE:AGN), one of the most widely discussed healthcare companies throughout 2014. The company became a potential takeover target by activist investor Bill Ackman of Pershing Square, who planned to purchase the pharmaceutical company together with Valeant Pharmaceuticals Intl Inc (NYSE:VRX). As Allergan, Inc. (NYSE:AGN) has been fighting the offer, its stock has been growing as investors were betting on Mr. Ackman winning the proxy fight with the company. The story took another step after another pharmaceutical company Actavis plc (NYSE:ACT) stepped in with a higher bid. All in all, the bets of activists have paid off and even better than expected, we can say. Meanwhile, many large investors have been bullish on Allergan, the company quickly becoming one of the most popular healthcare stocks. Deerfield initiated a stake in Allergan, Inc. (NYSE:AGN) in the middle of 2013, and throughout 2014 it has been constantly increasing the position. At the end of last year, the hedge fund held 606,600 shares of the company, valued at $128.96 million.

Deerfield’s stake in French-based Flamel Technologies S.A. (ADR) (NASDAQ:FLML) remained unchanged over the quarter at 5.26 million shares worth $90.08 million. The stock of the biopharmaceutical company gained 20% in the last quarter of 2014, but since the beginning of the year it fell by 9%. During the fourth quarter, Flamel Technologies S.A. (ADR) (NASDAQ:FLML) has attracted more interest from investors as the number of funds holding the stock increased to 27 which held around $284.33 million worth of the company’s stock, versus 18 funds holding $223.26 million of stock in the previous quarter. Broadfin Capital is also a shareholder of Flamel Technologies S.A. (ADR) (NASDAQ:FLML), disclosing ownership of 5.15 million shares in its last 13F filing.

And the last but not least is Avalanche Biotechnologies Inc (NASDAQ:AAVL), another biotech stock. Deerfield cut its position by 22% to 1.61 million shares, valued at $87.19 million. It seems like it was the right call, as Avalanche Biotechnologies Inc (NASDAQ:AAVL)’s stock lost around 33% since the beginning of the year. Mr. Flynn added the company to his fund’s equity portfolio during the third quarter and saw the stock jump by over 50% in the last three months of 2014. On the other hand, Venrock Healtchare Capital Partners, a fund specialized in biotech companies, initiated a $73.08 million position in Avalanche Biotechnologies Inc (NASDAQ:AAVL) during the fourth quarter of 2014 that contained 1.38 million shares.

Disclosure: None