Peter Kolchinsky founded RA Capital Management in 2001 and focuses mainly on healthcare stocks. One of the few hedge fund managers who actually holds a medical degree, Kolchinsky currently oversees an equity portfolio valued at roughly $1 billion, according to figures from the fund’s latest 13F filing. He also has a habit of investing in private biotech companies, which allows him to buy more shares at lower prices before the stock becomes available to the public. Insider Monkey calculates a fund manager’s stock picking ability by looking at the weighted average returns of his or her long positions in companies with a market cap that exceeds $1 billion, based on the size of those positions at the beginning of each quarter. Our calculations show that Kolchinsky’s stock picks have generated a positive return of 34.5% for 2015, while the equity portfolio of Martin Hughes‘ Toscafund Asset Management, which holds an equity portfolio with similar value, registered a loss of 3.1% for the year. In this article we’ll take a look at Peter Kolchinsky’s top five equity picks for the first quarter of 2016, which includes two new companies that went public during the 2015 fourth quarter.
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Aclaris Therapeutics Inc (NASDAQ:ACRS) is one of the biggest new positions in RA Capital Management’s equity portfolio at the end of December. According to the fund’s latest 13F filing, Peter Kolchinsky acquired 2.56 million shares valued at $69.1 million at the end of December. A developer of therapies for dermatological conditions, Aclaris Therapeutics Inc (NASDAQ:ACRS) went public in October 2015 at $11 per share. Although it was an instant hit, surging as high as $33.88 per share in December, the stock has soon embarked on a downtrend, which has continued into 2016. So far this year, Aclaris Therapeutics Inc (NASDAQ:ACRS) has lost approximately 30% of its value.
At the end of September, Axovant Sciences Ltd (NYSE:AXON) was Kolchinsky’s second largest equity position. Although he has made no changes to the stake during the fourth quarter and RA Capital Management continued to hold 5 million shares, Axovant Sciences Ltd (NYSE:AXON) slipped to fourth largest bet by value and it was worth approximately $90.1 million at the end of December. On February 9, the company reported a loss of $0.64 per share, which fell short of analysts’ expectations of a loss of $0.15 per share. With two drug candidates in the pipeline, Axovant Sciences Ltd (NYSE:AXON) still has $300 million in cash to burn through.
Kolchinsky also decided to increase his stake in Dyax Corp. (NASDAQ:DYAX), which was the subject of a takeover by Shire PLC (ADR) (NASDAQ:SHPG). RA Capital Management inched up its stake by 7% over the quarter to approximately 2.72 million shares valued at a little over $102 million. Since then, Shire has completed the acquisition of Dyax Corp. (NASDAQ:DYAX) for $37.30 per share, which would imply Kolchinsky’s investment is actually worth roughly $101 million. In addition, Shire agreed to pay an additional $4 for each Dyax Corp. (NASDAQ:DYAX) share, should the company’s drug candidate DX-2930 receive approval from the U.S. Food and Drugs Administration.
Turn the page to find out about Kolchinsky largest new bet and his top equity position at the end of 2015.