Joseph Edelman‘s Perceptive Advisors is a fund that has an equity portfolio worth $1.44 billion as of the end of June, with over 80% of it being invested in healthcare stocks. The fund’s focus on biotech generated exceptional returns in the past such as 129% in 1999 and 155% in 2000.
At Insider Monkey we also calculate a fund’s returns, taking into account only its long positions in companies worth at least $1.0 billion as disclosed in its 13F filing for a particular quarter. In this way, Perceptive Advisors gained over 17% from 53 “relevant” positions during the third quarter. Even though these results can differ from the actual returns, we use only publicly available data in order to understand whether or not we should follow this fund’s stock picks and include them in our own investment strategy, which is based on identifying stocks that hedge funds are collectively bullish on.
Since Perceptive Advisors had a strong run in the third quarter, we decided to take a look at its four largest long positions.
We’ll start with Neurocrine Biosciences, Inc. (NASDAQ:NBIX), in which the fund held some 2.80 million shares worth $127.17 million at the end of June. The stock returned 11.4% during the third quarter. At the end of the second quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long Neurocrine Biosciences, Inc. (NASDAQ:NBIX), a change of 18% from the end of March. Perceptive held the largest position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX), followed by OrbiMed Advisors with a $82.5 million position. Other investors bullish on the company included Sectoral Asset Management, Citadel Investment Group, and Baker Bros. Advisors.
Next in line is TESARO Inc (NASDAQ:TSRO), which was represented in Perceptive’s equity portfolio by a $96.12 million position, which contained 1.14 million shares at the end of the second quarter. In the following three months, the investor saw the shares advance by over 19%. It’s worth mentioning that at the end of June, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 47% on the quarter. In TESARO, Perceptive also amassed the largest position among the funds we follow. On the second spot was Passport Capital with a $61.7 million position. Other investors bullish on the company included venBio Select Advisor, Rock Springs Capital Management, and Cormorant Asset Management.