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Esperion Therapeutics Inc (ESPR), Intercept Pharmaceuticals Inc (ICPT): Visium and OrbiMed’s Recent Activity in Biotech

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Stocks in the biotechnology industry have been very active as of late, with companies’ shares registering significant gains. The industry jumped by 39% over the past 52 weeks and despite many experts considering that biotech stocks are currently in a bubble, investors still seem to be bullish, at least according to some of the latest filings with the Securities and Exchange Commission (SEC). Jacob Gottlieb‘s Visium Asset Management has disclosed raising its exposure to Esperion Therapeutics Inc (NASDAQ:ESPR), and Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSSin two newly amended filings with the SEC, though in another recent filing, Samuel Isaly’s OrbiMed Advisors reported further reducing its activist stake in Intercept Pharmaceuticals Inc (NASDAQ:ICPT). Let’s take a closer look at each move.

Jacob Gottlieb - Visium Asset Management

Even though big hedge funds are always on the radars of, and constantly being monitored by the media and the public, we track the activity of these big money managers for slightly different reasons. The general opinion is that by imitating hedge funds’ moves that are reported by various outlets, a smaller investor can earn some profits. While this might be the case with investors that engage in some sort of activist campaigns, overall a smaller investor is better off by simply allocating his capital to an index fund such as the S&P 500 ETF (SPY). This is also confirmed by comparing the returns of equity hedge funds that amounted to 4.8%, 11.1%, and 1.4% per year between 2012 and 2014, while the S&P 500 ETF (SPY) gained 16%, 32.3%, and 13.5% respectively during the same years.

This doesn’t imply that hedge fund managers are not good at picking stocks, it’s just a result of a significant increase in assets under management that amounts to around $3.0 trillion globally. However, we have found a method that can help a retail investor with much less capital to invest to obtain market-beating returns by following the activity of hedge funds. The system that we have developed involves imitating the 15 most popular small-cap picks among hedge funds. Following a series of backtests (read more details here), Insider Monkey launched a strategy that has been shared through newsletters since August 2012, and over the last 2.5 years it has generated returns of 132% and beat Mr. Market by more than 75 percentage points.

So, let’s get back to the latest moves that hedge funds made in the biotech sector. Visium Asset Management has disclosed increasing its passive stake in Esperion Therapeutics Inc (NASDAQ:ESPR) to 1.41 million shares, from just 200,000 shares held previously. Following the increase, Mr. Gottlieb’s healthcare-focused fund owns 6.4% of the $2.0 billion company. Esperion Therapeutics Inc (NASDAQ:ESPR) is engaged in the development and sale of therapies for patients with high levels of low-density lipoprotein cholesterol. The company’s stock had a very impressive run over the last year, surging by over 500%.

Esperion Therapeutics Inc (NASDAQ:ESPR) has recently announced positive results from a mid-stage trial of its cholesterol-busting drug ETC-1002, which also helped the stock gain more ground. Last week, however, the stock dropped by more than 15% on Wednesday, amid a large sell-off that affected many biotech stocks and sparked discussions regarding a burst of the bubble. Another investor that is bullish on Esperion Therapeutics is Dennis Purcell’s Aisling Capital, which owns 2.05 million shares as of the end of 2014, the company representing its largest holding in terms of value.

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