Mark Lampert’s Biotechnology Value Fund recently filed its 13F with the U.S. Securities and Exchange Commission for the reporting period of March 31. The firm’s public equity portfolio stood $478.24 million, while it has $999.89 million in assets under management. Since its foundation in 1993, Biotechnology Value Fund has consistently worked to develop concentrated and long-term investments with a focus on small-cap biotechnology companies. Insider Monkey has a keen interest in the activities of the San Francisco-based investment firm and has been tracking its activities. In this article, we focus on three of its top small-cap picks, which are Array Biopharma Inc (NASDAQ:ARRY), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), and Forward Pharma A/S (NASDAQ:FWP).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 142% over the last 33 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
At the end of the first quarter, Biotechnology Value Fund held a total of 9.41 million shares of Array Biopharma Inc (NASDAQ:ARRY) valued at $69.32 million. This represented a decrease compared to the end of the fourth quarter of 2014 when it held a total of 11.77 million shares, although the value of the position has actually increased since then. That’s because shares of the biotechnology company, which recently sold its Longmont facility, chemistry, manufacturing and controls (CMC), to Accuratus Lab Services Inc, gained over 50% during the first quarter of the year. Array recently ranked 419 on a list of the fastest-growing companies released last year by Deloitte Technology Fast 500, with the firm having an annual revenue growth of 179%. Seven Wall Street analysts have given the stock an average short term price target of $11.00, signifying yet more upside of another 50%. Analysts will be keen to know whether the stock will pull a surprise like it did in its most recent quarterly report where it delivered a 42.11% earnings surprise factor. During the first quarter several other hedge funds had stakes in Array Biopharma Inc (NASDAQ:ARRY), including Jeremy Green’s Redmile Group and James E. Flynn‘s Deerfield Management. In total, 21 hedge funds out of the 730 actively reporting funds we track invested in the stock, having an aggregate investment of $446.26 million.