The shares of Biogen Inc (NASDAQ:BIIB) were down by 21.52% after missing analysts’ revenue expectations for the quarter and slashing its revenue guidance for the full fiscal year. The biopharmaceutical company reported revenues of $2.59 billion compared to market expectations of $2.73 billion, for the second quarter of 2015. Despite its better-than-expected earnings per share of $4.22 , with Wall Street expectating of $4.10, the shares plummeted. The primary reason for the drop was a lower annual earnings per share guidance update of between $15.50 and $15.95 against its earlier estimate of $16.60 to $17.00. Biogen Inc (NASDAQ:BIIB) reported 7% year-over-year growth in its revenues compared to the prior year quarter along with a 21% increase in its non-GAAP diluted EPS. Another reason behind the bearish market sentiment is the net sales of TECFIDERA missing analysts’ estimates of $909 million with reported sales of $883 million. It is the primary product in Biogen’s portfolio, and is used for the treatment of relapsing multiple sclerosis.
The CEO of Biogen Inc (NASDAQ:BIIB), George A. Scangos, Ph.D., was optimistic about the increasing usage of the drug by patients. He said, “TECFIDERA, which is now the most prescribed oral MS therapy globally, is experiencing moderated patient growth following rapid initial uptake. The launch of PLEGRIDY® is expanding into new markets, and TYSABRI® continues to add new patients requiring higher efficacy.”
Today’s trading session has wiped out the gains achieved by the shares of Biogen Inc (NASDAQ:BIIB) in 2015, with its shares now down by over 11% year-to-date. Smart money held a bullish outlook of the company during the first quarter, with aggregate investments of $3.41 billion from 64 hedge fund managers against investments of $2.77 billion from 57 hedge fund investors as of December 31. The shares of Biogen Inc (NASDAQ:BIIB) improved by 23.39% in the first quarter, boosting the net investments from hedge fund managers, though they also added to their collective share total.
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The insiders at Biogen Inc have disposed of their stakes in the company with seeming vigor, with at least 41 insider sales in 2015. Eric Rowinsky, Director at Biogen, sold 23,333 shares of the company in four individual transactions this year, with the largest transaction occurring on March 20 and involving 11,667 shares.
Let’s analyze the key hedgie action regarding Biogen Idec Inc. (NASDAQ:BIIB) to see where the smart money went wrong.
How have hedgies been trading Biogen Idec Inc. (NASDAQ:BIIB)?
At the end of the first quarter, a total of 64 of the hedge funds tracked by Insider Monkey were long in this stock, an increase of seven from the end of the fourth quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.
According to hedge fund experts at Insider Monkey, Samuel Isaly’s OrbiMed Advisors had the most valuable position in Biogen Idec Inc. (NASDAQ:BIIB), worth close to $509.6 million with 1.20 million shares, accounting for 4.3% of its total 13F portfolio. Sitting in the second spot was D E Shaw, managed by David E. Shaw, which held a $385.5 million position of 912,933 shares; 0.6% of its 13F portfolio was allocated to the company. Other hedgies that were bullish included Cliff Asness’ AQR Capital Management, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Israel Englander’s Millennium Management.
Now, specific money managers were leading the bulls’ herd. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, assembled the most valuable position in Biogen Idec Inc. (NASDAQ:BIIB). Healthcor Management LP had $80.5 million invested in the company at the end of the quarter. Jacob Doft’s Highline Capital Management also made a $66.4 million investment in the stock during the quarter. The other funds with brand new Biogen positions were Pasco Alfaro and Richard Tumure’s Miura Global Management, and John Burbank’s Passport Capital.
Despite slightly negative market sentiment and weaker than anticipated results, we would go with the hedge fund outlook and recommend a buy during the stock’s current weakness.
Disclosure: None
