Versartis Inc (VSAR) Finally Having The Breakout Hedge Funds Were Waiting For

The most bullish investor on Versartis continued to be Julian Baker and Felix Baker’s Baker Bros. Advisors, not a bad backer to have in your corner, considering the fund just ranked as the best performing fund in our database during the second quarter (using our unique metric, which differs from actual returns), out of the more than 700 funds that we track at Insider Monkey. Oh, and its specialty just happens to be healthcare stocks. Baker Bros. held 2.98 million shares of the company, increasing its position by 31% during the first quarter.

Dennis Purcell’s Aisling Capital also remained a firm supporter of Versartis, holding 2.28 million shares on March 31, having increased its own position by 15% during the first quarter. The firm’s Anthony Sun sits on the Versartis Board of Directors as an MD Partner. Other investors include healthcare-focused funds Perceptive Advisors and Healthcor Management LP, while Peter Kolchinsky’s RA Capital Management, which reported a large position in the company shortly after its IPO, still maintains a holding of over 231,000 shares in the company.

Professional investors like Purcell spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. 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? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 135% and beaten the market by more than 80 percentage points since the end of August 2012, and by 4.6 percentage points in the first quarter of this year (see the details).

Disclosure: None