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Next Big Biotech Stock To Buy: Hedge Funds’ New Moves

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Both Antares Pharma Inc (NASDAQ:ATRS) and Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) recently had their names attached to 13G forms, as two hedge funds raised their holdings in the companies. Kevin Kotler‘s (pictured) Broadfin Capital acquired about 442,500 shares of Antares Pharma to take its total stake in the company to 8.02 million shares representing 5.12% of the company’s outstanding shares. David Cohen and Harold Levy‘s Iridian Asset Management, on the other hand, gave its holding in Allscripts Healthcare a huge boost by adding some 20.21 million shares in its current holding of 20.26 million shares, amassing about 10.7% of the company’s outstanding stock.

Kevin Kotler

Founded in June 2005 the New York City-based Broadfin Capital has 80% of its public equity portfolio invested in the healthcare sector. At the end of June the market value of this equity portfolio stood at $1.86 billion. Broadfin was the third best performing hedge funds among the 700+ hedge funds we are tracking. Their long positions returned an average of 28% during the second quarter and 131% during the last 12 months. Iridian on the other hand has a longer history with its establishment dating back to 1996. The market value of the fund’s public equity portfolio amounts to $12.69 billion with 23% investments in the materials sector.

Kevin Kotler
Kevin Kotler
Broadfin Capital

But why do we track the hedge fund activities? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect the hedge funds’ activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small cap stock picks among hedge funds also bested passive index funds by around 60 percentage points over the 36 month period beginning with September 2012 (read the details here).

Broadfin has continuously held a position in Antares Pharma Inc (NASDAQ:ATRS) since the fourth quarter of 2013. The stock price of the $281.75 million specialty pharmaceutical company has depreciated by nearly 30% so far this year. In comparison the medical instruments and supplies industry has posted gains of 4.48% on year-to-date basis. In its financial results for the second quarter ending in June, Antares Pharma Inc (NASDAQ:ATRS) posted a net loss per share of $0.01, which was $0.02 higher than expectations while record revenues of $14.42 million were not only 127.8% higher on a year-over-year basis but also beat the expectations by $3.49 million. The company is focusing on four major projects going forward . Firstly, to increase the prescription rate of OTREXUP, the single-dose auto-injector containing methotrexate, which treats adults with sever arthritis, and children with active polyarticular juvenile idiopathic arthritis (pJIA), after treatment with other medicines has failed to have a significant impact. Secondly, Antares is also preparing for a possible approval and launch by Teva of its generic Epinephrine pen, which is  is an emergency injection used for the treatment of life-threatening allergic reactions known as anaphylaxis. Thirdly, Antares Pharma Inc (NASDAQ:ATRS) is continuing with the development of QuickShot Testosterone, and finally it has the generic Sumatriptan in its bag for which it is seeking to get an approval.

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