Over the past couple of days, the healthcare sector has witnessed plenty of insider activity, which should not be overlooked. In this article, I will examine two companies in this segment..
First off is Owens & Minor, Inc. (NYSE:OMI), a $2.1 billion market cap Fortune 500 company that provides third-party logistics (3PL) services to manufacturers and suppliers of healthcare and life-science products. On May 7th, Richard Meier, Executive Vice President and Chief Financial Officer, acquired 2,500 shares of Common Stock for $32.50 per share. Following this transaction, Mr. Meier holds 40,566 shares of the company, worth more than $1.3 million.
On top of Mr. Meier’s bullishness, more than a dozen major hedge funds hold long positions in the stock. The largest hedge fund shareholder, Chuck Royce’s Royce & Associates, holds 1.83 million shares of the company. Joel Greenblatt (Gotham Asset Management) also seems to feel confident about the company’s future, as he last increased his stakes by 69% to 373,228 shares (in Q4 2013). Similar is Ken Griffin, David Dreman and Mario Gabelli´s case: they all declared having added shares of the company to their portfolios over the last quarter that they reported.
Despite the positive sentiment amongst insiders and funds, analysts do not seem to like this company. In spite of Owens & Minor’s above average margins and return on assets, coupled with a cheap valuation, most analysts rate the stock as a “hold” or “underperform” case, and expect it to deliver average annual EPS growth rates around 9% over the next five years –compared to an industry mean of 14%-15%.
The second healthcare company I would like to refer to is Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR), a $976 million market cap biopharmaceutical company focused on the development and commercialization of its product, lomitapide. Opposite to Owens & Minor, Aegerion does not look good on paper. While it boasts negative margins and returns, it still trades above the biotech industry average valuations. However, analysts seem to love the stock, and recommend buying it. Consensus estimates point towards average annual EPS growth rates around 1,253% over the next five years.
In addition to analysts, both hedge funds and insiders seem to feel bullish about this stock. On Thursday May 8th, Marc D. Beer, Chief Executive Officer, acquired 30,000 shares of Common Stock for prices ranging from $34.64 to $35.35 per share, inclusive. He now holds 33,000 shares directly, and another 246,462 shares, indirectly. Moreover, the two largest hedge fund shareholders, Andreas Halvorsen´s Viking Global, and Arthur B Cohen and Joseph Healey Healthcor Management Lp, have been increasing their stakes at the company. The latter doubled its bets over the last reported quarter, to 850,000 shares; Viking Global increased its holdings by 18%, to 881,333 shares.
Disclosure: Javier Hasse holds no position in any stocks mentioned