Best Healthcare Stocks: Billionaire Seth Klarman’s Picks

What are the best healthcare stocks to invest in? Baupost Group was founded in 1982 by Harvard Professor William Poorvu and partners Howard Stevenson, Jordan Baruch and Isaac Auerbach, and Seth Klarman joined later on. The investment management firm is one of the biggest hedge funds in the world.

Baupost Group holds a well-diversified equity portfolio worth $7.04 billion as of the end of September, with the largest share, 28%, amassed by the energy sector 28%. Information technology and healthcare stocks account for 22% and 20% of the 13F portfolio, respectively. During the September quarter, In this article, we are going to discuss some of Baupost’s favorite healthcare stocks, including Allergan plc (NYSE:AGN), Theravance Biopharma Inc (NASDAQ:TBPH), Innoviva Inc. (NASDAQ:INVA), Keryx Biopharmaceuticals (NASDAQ:KERX), and Atara Biotherapeutics Inc (NASDAQ:ATRA). Let’s analyze the healthcare picks more in depth.

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Allergan plc (NYSE:AGN)’s stock has lost 39% so far this year and currently has a dividend yield of 1.48%. At the end of September, Baupost held 2.0 million shares of Allergan valued at $461.08 million. Among the hedge funds in our database, 115 funds held $10.59 billion worth of Allergan shares in their portfolio at the end of September, which represented 15.2% of the outstanding shares. The company recently has announced that it received approval from Health Canada allowing the expansion of the label of its drug Fibristal for the long term treatment of signs and symptoms of uterine fibroids.

Theravance Biopharma Inc (NASDAQ:TBPH)’s stock has surged by 90% year-to-date. Baupost Group held 7.35 million shares of Theravance Biopharma worth $266.40 million at the end of the third quarter. Among the funds we track, 12 funds held $696.85 million worth of Theravance Biopharma’s stock in aggregate at the end of September. Theravance Biopharma recently reported narrower than expected loss for its third quarter at $0.73 per share, beating consensus estimate of $0.95 per share loss. The company’s revenue for the quarter stood at $19.1 million, beating $16.4 million street expectation.

In Innoviva Inc. (NASDAQ:INVA), Baupost Group held a $164.10 million position that contained 14.93 million shares, down by 15% over the quarter. The number of funds from our hedge fund database long Innoviva amounted to 21 at the end of September. The total value of their holdings stood at $394.75 million, versus $436.91 million held by 20 funds at the end of the previous quarter. Innoviva recently joined the S&P SmallCap 600. It replaced Rofin-Sinar Technologies Inc., which was acquired by Coherent Inc. in a deal completed in November.

Keryx Biopharmaceuticals (NASDAQ:KERX) has been another winner in Baupost’s equity portfolio this year as the stock has appreciated by 14% since the beginning of January. Baupost Group held 25.79 million shares worth $136.954 million at the end of September, being among 11 investors from our database that disclosed long positions in the company as of the end of September, down by one over the quarter. Keryx Biopharmaceuticals reported third quarter loss of $0.39 per share, missing the consensus estimate of a loss of $0.22 per share. However, its revenue for the quarter stood at $6.3 million, surpassing consensus expectation of $5.8 million.

Atara Biotherapeutics Inc (NASDAQ:ATRA) was represented in Baupost’s 13F portfolio by an $114.64 million stake containing 5.36 million shares at the end of September. Seven hedge funds we track hold about $210.53 million of Keryx Biopharmaceuticals stock as of the end of the third quarter. Keryx Biopharmaceuticals recently reported a loss of $25.4 million or $0.88 per share for the third quarter, wider than expected loss of $0.78 per share.

Disclosure: none