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Tekmira Pharmaceuticals Corp (TKMR): QVT Financial’s New Holding and Two Other Healthcare Picks

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Daniel Gold’s QVT Financial has disclosed a new stake in Tekmira Pharmaceuticals Corp (NASDAQ:TKMR). According to the 13D Form filed with the U.S. Securities and Exchange Commission, the investment firm now owns 16.01 million common shares, representing 34.4% of the company’s outstanding stock. Mr. Gold actually had around 40% of his equity portfolio invested in healthcare stocks at the end of 2014 and his other healthcare bets include Tenet Healthcare Corp (NYSE:THCand Acceleron Pharma Inc (NASDAQ:XLRN). Covidien plc (NYSE:COV)

QVT Financial is a New York-based hedge fund that was founded and is currently managed by Daniel A. Gold. The firm invests in debt markets and alternative investment markets, employing convertible arbitrage, investment grade, and closed-fund arbitrage strategies. Furthermore, the fund favors fundamental and quantitatively-oriented trading strategies and boasts an equity portfolio valued at around $2 billion as of last quarter. With a strong focus on healthcare sector, Mr. Gold was also betting on the consolidation of the sector and two of his largest long positions were in Covidien plc (NYSE:COV) and Cubist Pharmaceuticals Inc (NASDAQ:CBST), both of which have been acquired earlier this year.

Following the activity of large hedge funds like QVT Financial can provide many opportunities for smaller investors seeking to beat the market. However, rather than focusing on large-cap stocks, in which these hedge funds invest their money in most cases, a better approach is to focus on their small-cap picks. Our research showed that investing in 15 most popular small-cap stocks among hedge funds outperformed the market by 1 percentage point per month between June 1999 and August 2012. Our strategy based on these small-cap stocks, returned 132% between August 2012 and March 2015, versus a gain of 57% for the S&P 500 ETF (SPY) during the same period.

According to the latest filing, QVT may be deemed to beneficially own shares of Tekmira Pharmaceuticals Corp (NASDAQ:TKMR) after an affiliate of the fund got the right to appoint a director of Roivant Sciences, which is the direct holder of these shares. QVT has appointed  Dr. Keith Manchester, the Head of Life Sciences and Portfolio manager at QVT, as a director of Roivant, the filing added. Roivant owns 16.01 million shares of Tekmira Pharmaceuticals. Another shareholder of the company is Julian Baker and Felix Baker’s Baker Bros. Advisors, which holds a stake of 484,100 shares, which was valued at $7.34 million at the end of the fourth quarter. Furthermore, Richard Gerson and Navroz D. Udwadia’s Falcon Edge recently disclosed a 10% passive stake in Tekmira Pharmaceuticals Corp (NASDAQ:TKMR). The company reported a net loss of $1.80 per share for 2014, while analysts expected a loss of $1.61 per share. According to CEO Mark J. Murray, the wider loss was due to a $17.2 million increase in R&D. Furthermore, the president recently commented that 2014 was a transformational year for the company, indicating that 2015 could be a year of significant progress.

Last quarter, Covidien plc (NYSE:COV) was QVT Financial’s top pick, with a stake of 1.2 million shares, valued at $122.74 million. This investment proved to be quite profitable as the company was purchased by Medtronic Inc in a $42.9 billion takeover, which was completed in February. QVT Financial also initiated a stake in Cubist Pharmaceuticals Inc (NASDAQ:CBST) last quarter, disclosing a $120.78 million stake with 1.2 million shares. In December of 2014, Merck & Co., Inc. (NYSE:MRK) announced a $9.5 billion takeover of Cubist Pharmaceuticals Inc (NASDAQ:CBST), which was completed a month and a half later and included $1.1 billion in net debt. The acquisition saw Merck & Co pay $102 per share, representing a 35% premium over the Cubist’s stock price.

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