It is easy to imagine that hedge funds would not reveal their equity positions if it were not for reporting requirements enforced by the Securities and Exchange Commission. Indeed, quarterly 13F filings, as well as Form 4, and Schedule 13G and 13D filings do reveal potentially lucrative stock picks that these investors have spent a good deal of time and resources uncovering, which is the primary reason why individual investors should pay close attention to these public filings. While some tend to think that 13Fs are rather useless because of the delay in their filing, our research has proven otherwise. Alternatively, 13F skeptics can easily follow hedge funds’ 13G and 13D filings, which are much more timely and concern only major positions of hedge funds. Thus, the following article will reveal three healthcare-related moves made by several reputable hedge funds observed by the Insider Monkey team, which have been reported on such filings recently.
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
According to a Schedule 13G filing, Zach Schreiber’s PointState Capital L.P. owns 2.95 million shares of Clovis Oncology Inc. (NASDAQ:CLVS), which account for 7.7% of the company’s outstanding common stock. The hedge fund firm held a 50,000-share stake in the biopharmaceutical company as of September 30. In July 2015, the company, which focuses on developing innovative anti-cancer agents, submitted a New Drug Application filing and a Marketing Authorization Application for its lead candidate rociletinib. However, the U.S. Food and Drug Administration recently asked Clovis Oncology to provide additional clinical data on this drug candidate, which sent the stock plummeting. In fact, the shares of Clovis have lost more than 70% since the announcement and are down by 52% for the year. Hence, it appears that hedge fund PointState found this massive pullback as an appealing point of entry.
In the meantime, Clovis Oncology Inc. (NASDAQ:CLVS) received more attention from the hedge funds monitored by Insider Monkey during the third quarter, as the number of top money managers invested in the biopharmaceutical company increased to 31 from 29 quarter-over-quarter. Similarly, the value of their stakes grew to $1.22 billion from $864.01 million quarter-over-quarter, which will be significantly lower now considering the recent drop in the company’s share price. Nevertheless, these hedge fund firms accumulated 34.60% of the company’s shares on September 30. Eric Chen’s Antipodean Advisors acquired a 1.31 million-share stake in Clovis Oncology Inc. (NASDAQ:CLVS) during the third quarter.
Let’s move on to the next page of the article, where we’ll discuss the moves made by Highbridge Capital Management and Orbimed Advisors on the other healthcare-related stocks.