Clifford Fox’s Columbus Circle Investors is a multi-billion dollar investment management firm that has been primarily successful in picking small-cap and mid-cap stocks over the years. The investment firm employs a growth-based long/short investment strategy with a strong focus on the U.S equity markets. Its small-cap portfolio had generated an annualized return of 16% over the past ten years through June 30, while the Russell 2000 Growth Index returned 9.9% over the same time span. However, the bloody third quarter left its mark on the firm’s portfolio, with its market value declining to $12.23 billion from $14.15 billion quarter-over-quarter. Unquestionably, Columbus Circle Investors undertook a serious re-balancing process during the latest quarter, so we thought it would be worthwhile to take a look at its most prominent healthcare stock picks, as revealed through the firm’s 13F filing for the September quarter. The healthcare sector showed noticeable signs of weakness throughout the latest quarter, so let’s see which healthcare stocks Clifford Fox and his team put their faith in coming out of it.
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 102% over the last 37 months, which is more than 53 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
#5 DexCom Inc. (NASDAQ:DXCM)
Shares Owned by Columbus Circle Investors (as of September 30): 1.25 million shares
Value of Holding (as of September 30): $107.23 million
Columbus Circle Investors put more faith in DexCom Inc. (NASDAQ:DXCM) during the third quarter, as it increased its stake in the company by 321,935 shares. The shares of the glucose-monitoring company gained 7% during the September quarter despite suffering a serious pullback at the end of the three-month period. The yearly stock performance of the company has been even stronger, with its shares advancing by 53% year-to-date. Yesterday the company reported third quarter revenue of $105.2 million, which marked an increase of 52% year-over-year. However, its GAAP net loss widened to $42.5 million, from a loss of $5.2 million reported in the same quarter last year. Israel Englander’s Millennium Management owned nearly 499,000 DexCom Inc. (NASDAQ:DXCM) shares on June 30.
#4 Edwards Lifesciences Corp (NYSE:EW)
Shares Owned by Columbus Circle Investors (as of September 30): 975,221 shares
Value of Holding (as of September 30): $138.65 million
Columbus Circle Investors increased its exposure to Edwards Lifesciences Corp (NYSE:EW) during the third quarter as well, augmenting its position by 10,664 shares. The medical equipment company specializing in artificial heart valves and hemodynamic monitoring has seen its stock gain 23% since the beginning of the year. At the end of October, Edwards Lifesciences revealed its stronger-than-expected financial results for the third quarter and raised its full-year earnings guidance. The strong demand for its replacement heart valves, which exceeded the company’s expectations, played a crucial role in the delivery of the strong financial performance. Edwards Lifesciences’ global sales climbed by 1.3% year-over-year to $615.5 million, while its diluted earnings per share increased by 23% to $1.07. From the massive pool of hedge funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management was the top equity holder of Edwards Lifesciences Corp (NYSE:EW) at the end of the June quarter, holding 2.40 million shares.