These Biotech Stocks Move in Opposing Directions Today and Hedge Funds Say You Should Bet on One of Them

The reason for Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)‘s decline can be traced to a recent scandal sparked by a 5,000% increase in the price of a drug used for the treatment of AIDS patients. As a result, Hillary Clinton embarked on a crusade against pharmaceutical companies that charge high prices simply because they can. In a series of tweets, Clinton has announced a prescription drug reform plan, promising to cap a family’s bill for covered medications at $250 a month. The changes would force pharmaceutical companies to reinvest profits into research and development and would allow for more generic and imported drugs. It would also offer Medicare more bargaining power in setting the prices for medication required by patients with chronic health problems. With such measures spelling troubles for companies developing high-priced drugs, the news had an immediate effect on a number of bio-tech stocks, with Lexicon Pharmaceuticals among the most severely hit.

Hedge fund sentiment towards Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) has improved during the second quarter, with the total number of funds holding long positions increasing to 16 from 13, while the overall value of their investments grew by 16% to $20.9 million. However, the biggest shareholders among the funds that we track have massively reduced their stakes in the company. Chuck Royce’s Royce & Associates has dumped 87% of its stake during the second quarter, leaving with 377,074 shares, while Jim Simons’s Renaissance Technologies has cleared 90% of its investment and currently holds just 170,153 shares. However, Roberto Mignone’s Bridger Management was unfazed by these developments and has initiated a position in Lexicon Pharmaceuticals, stockpiling 259,458 shares during the quarter.

Disclosure: none.