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Healthcare-Focused Fund Camber Capital’s Top Picks: Masimo Corporation (MASI), The Medicines Company (MDCO)

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Camber Capital Management is a hedge fund headquartered in Boston and founded by Stephen DuBois. The hedge fund is considered as an activist due to activist position in Conceptus Inc. from 2011. In the last round of 13F filings, Camber Capital Management revealed an equity portfolio valued at $1.4 billion, focused on healthcare stocks, which represent 81% of the total value. As of the end of March, Stephen DuBois’ largest positions are represented by Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Masimo Corporation (NASDAQ:MASI), The Medicines Company (NASDAQ:MDCO) and Genomic Health, Inc. (NASDAQ:GHDX).

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)

We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in back tests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 142%, nearly 2.5 times greater returns than the S&P 500 during the same period (read more details here).

Let’s take a closer look at Stephen DuBois’ top picks. On the first spot is Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), in which Camber Capital Management disclosed a $102.80 million position that contains 1.65 million shares. Teva Pharmaceutical is an Israeli pharmaceutical company established in 1901, which produces more than 64 billion tablets and capsules per year. For the first quarter of the year, the Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) reported a GAAP net income of $0.52 per share, down by 40% on the year on revenue of $4.98 billion. Moreover, recently Teva has reported that it acquired a 4.61% stake in Mylan NV (NASDAQ:MYL). A  couple of months earlier, Teva made a bid to buy Mylan for $82.00 per share in stock and cash, but the deal was rejected by Mylan’s board. Among the funds we track, Zach Schreiber’s Point State Capital is the largest shareholder of Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) holding a position valued at $642.31 million with 10.31 million shares, more by 28% compared to the previous quarter.

Mr. DuBois’ stake in Masimo Corporation (NASDAQ:MASI) is the second-largest in his equity portfolio with a value of $89.05 million. The total number of shares held by Camber in the global medical technology company has decreased by 150,000 shares on the quarter to 2.7 million shares. Masimo Corporation’s stock surged by more than 50% since the beginning of the year. According to the company’s latest financial results, Masimo Corporation (NASDAQ:MASI) had revenue of $155 million in the first quarter, up from $140 million a year earlier and diluted EPS of $0.38 versus $0.39 for the first quarter of 2014. David Shaw’s D.E. Shaw and Chuck Royce’s Royce & Associates are other two shareholders in Masimo Corporation (NASDAQ:MASI), among the funds we track, holding 581,014 shares and 441,000 shares, respectively.

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