Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Fund Were Wrong About Receptos Inc (RCPT) As Celgene Corporation (CELG) Snatches It Up At Premium

Page 1 of 2

The shares of both Receptos Inc (NASDAQ:RCPT) and Celgene Corporation (NASDAQ:CELG) are trading 10% higher after the two pharmaceutical companies entered into a definitive merger agreement after the close of trading yesterday. Celgene Corporation will acquire Receptos for $7.32 billion, paying $232.00 for every share of the latter. This acquisition will improve the Inflammation & Immunology (I&I) portfolio of Celgene and help the company capitalize on its stronger position in inflammatory bowel disease (IBD) treatment. This is another example of the pharmaceutical company’s strategy to grow through acquisitions and mergers. One of the recent ones includes its partnership with Juno Therapeutics Inc (NASDAQ:JUNO) for $1 billion, making its cancer immunotherapy portfolio accessible to Celgene Corporation (NASDAQ:CELG) along with a 30% stake in Juno for the next ten years.

Less Competitive Medical Schools in the US

The acquisition of Receptos will allow Celgene to get its hands on Ozanimod, which is known to provide relief in ulcerative colitis and relapsing multiple sclerosis. While discussing the acquisition, Bob Hugin, Chairman and CEO of Celgene, said, “This acquisition enhances our I&I portfolio and allows us to leverage the investments made in our global organization to accelerate our growth in the medium and long-term.” Faheem Hasnain, President and CEO of Receptos Inc (NASDAQ:RCPT) called Celgene an excellent partner for the growth of Ozanimod. He further added, “In Celgene, we have found the ideal partner to maximize the potential of Ozanimod and our promising pipeline in order to improve the lives of patients worldwide.”

The shares of Receptos Inc (NASDAQ:RCPT) have grown by 86.77% year-to-date along with a 15.26% growth in the second quarter. Smart money was wrong about the pharmaceutical company as it turns out, as the majority of the hedge fund managers that we track bet against the company by withdrawing their investments during the first quarter. Only 34 hedge fund managers held a position in the company with investments worth $764.83 million compared to investments of $893.13 million from 38 investors. That overall holdings declined despite the stellar performance of the stock in the first quarter shows that hedge fund managers were taking profits from the position in droves and likely felt the ceiling had been reached, at least short term.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 139% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.

In addition to the hedge fund managers, it might be safe to say that the insiders didn’t see this deal coming earlier in 2015, as multiple insider sale transactions have been processed year-to-date. Edward S. Torres, Director at Receptos Inc, was among the major sellers in the past few months, as he sold 220,000 shares in June and a total of 301,506 shares in 2015.

Let’s analyze the hedge fund activity surrounding Receptos Inc (NASDAQ:RCPT) at the end of the first quarter.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!