McAndrews was an ad exec with Microsoft Corporation (NASDAQ:MSFT) and also previously worked with Madrona Venture Group, so it’s clear what the company’s board wants its primary focus to be. Mobile advertising should also be an important business for investors to watch going forward, as it now makes up close to 75% of Pandora’s total top line; this figure sat below 60% last year.
In addition to Mandel, Israel Englander and Paul Tudor Jones established new positions in Pandora last quarter, and all three have been known to make their fair share of growth-based investments regardless of valuation. With Pandora’s earnings growth estimated to average 45% a year over the next half-decade, we’ll chalk it up as another momentum play.
Achillion Pharmaceuticals
Last but certainly not least, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) was part of another big move in the hedge fund world last week. Peter Kolchinsky’s biotech fund, RA Capital, disclosed a stake of nearly 15% in Achillion via a 13G filing. Kolchinsky is a virology Ph.D. from Harvard and he founded RA Capital in 2001 with seed money from Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) co-founder Rich Aldrich. Judging by his fund’s near exclusivity in the healthcare sector, it’s no surprise that his latest bet it on a company in this area.
It is a surprise, though, that he decided to bet on Achillion. The stock is down a whopping 63% in the past five trading days, as news of the FDA’s decision to keep Sovaprevir—the company’s hepatitis C drug currently in Phase II trials—on hold due to “abnormal liver results,” according to a Bloomberg report. It appears that for all intents and purposes, Sovaprevir is done as a potential HCV treatment, and most analysts expect Achillion to now focus on the remaining drugs in its pipeline.
The company still has the compound ACH-3102 in Phase II, ACH-2684 in Phase I and ACH-3422 in preclinical trials, so it’s possible that Kolchinsky is bullish on one of these drugs becoming a viable HCV treatment option. There’s also a chance that the hedge fund manager could think that Sovaprevir still has more life in it, but for now, there’s no way to know.
The only thing Kolchinsky and RA Capital’s move tells us is that they saw a value opportunity with Achillion taking a massive price drop last week. Shares do currently trade at a depressed cash flow multiple about half that of industry norms. The company isn’t profitable yet so unless you’re confident in Achillion’s ability to avoid further flogging from the FDA, we’d avoid investing here just yet. Instead, it wouldn’t be a bad idea to study how Kolchinsky trades the stock in the coming months
Disclosure: none
