In this article, we discuss 10 biotech stocks to buy according to Chinese billionaire Lei Zhang.
Hillhouse Capital Management was founded by Chinese billionaire investor and hedge fund manager Lei Zhang in 2005. Zhang, a Yale MBA graduate, is the chairman and chief executive officer of Hillhouse Capital Management, with his hedge fund focusing on a long-term equity strategy, investing globally with a particular interest in the Chinese and Asian markets.
The Q3 portfolio at Hillhouse Capital Management is worth $7.6 billion, with a top ten holdings concentration of 69.25%. Lei Zhang invests primarily in the healthcare, consumer discretionary, information technology, and communications sectors. As per the 13F filings from the third quarter, Hillhouse Capital Management purchased 20 new stocks, reduced holdings in 15 companies, bought additional stakes in 5 equities, and sold out of 24 securities.
The fund’s top buys included Legend Biotech Corporation (NASDAQ:LEGN), salesforce.com, inc. (NYSE:CRM), and JD.com, Inc. (NASDAQ:JD). Whereas, Hillhouse Capital reduced its stakes in Pinduoduo Inc. (NASDAQ:PDD), Zoom Video Communications, Inc. (NASDAQ:ZM), and Airbnb, Inc. (NASDAQ:ABNB).
The most notable stock picks of Chinese billionaire Lei Zhang as of September 2021 include Uber Technologies, Inc. (NYSE:UBER), Alibaba Group Holding Limited (NYSE:BABA), and Mondelez International, Inc. (NASDAQ:MDLZ).
Lei Zhang of Hillhouse Capital Management
Our Methodology
We used the Q3 portfolio of Lei Zhang’s Hillhouse Capital Management to select the billionaire’s top 10 biotech stocks.
Biotech Stocks To Buy According To Chinese Billionaire Lei Zhang
10. argenx SE (NASDAQ:ARGX)
Hillhouse Capital Management’s Stake Value: $36,240,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 0.47%
Number of Hedge Fund Holders: 28
argenx SE (NASDAQ:ARGX), a biotech company working on immunology and autoimmune diseases, is one of the best stock picks of Chinese billionaire Lei Zhang. As of Q3 2021, Hillhouse Capital Management owns 120,000 argenx SE shares, worth $36.2 million, representing 0.47% of the firm’s total investments.
Baird analyst Joel Beatty on December 21 raised the price target on argenx SE to $367 from $355 and kept an Outperform rating on the shares. The analyst noted that one of its new drugs, Vyvgart, was approved by the FDA, and he views the label as favorable and in-line with investor expectations.
On October 28, argenx SE reported its financial results for the nine months ending September 2021. The company posted a GAAP loss per share of $3.23, and a revenue of $471.26 million, up 1300.5% year-over-year.
At the end of September, 28 hedge funds in the database of Insider Monkey reported owning stakes in argenx SE, worth $1.36 billion, as compared to 27 funds in the preceding quarter, holding stakes valued at $1.45 billion in argenx SE.
Julian Baker and Felix Baker’s Baker Bros. Advisors is the largest argenx SE stakeholder as of the third quarter, with 1.11 million shares worth $338.1 million.
In addition to Uber Technologies, Inc., Alibaba Group Holding Limited, and Mondelez International, Inc., argenx SE is one of the best stock picks of billionaire Lei Zhang.
Here is what Artisan Partners has to say about argenx SE in its Q2 2021 investor letter:
“Argenx is a Dutch biotechnology company developing antibody based therapies for autoimmune diseases and cancer. Commercial preparations are underway for the company’s FcRn drug efgartigimod, which is used to treat patients with severe autoimmune diseases. Discussions with health insurance payers have been positive, and the manufacturing/supply chain is well-positioned. Argenx appears to be not only first-in-class (a first mover) but also the best-in-class asset in a high value and competitive field of FcRn drugs. First-in class drugs typically take the majority of market share, and with a best-in-class profile, Argenx could solidify a dominant market position.”
9. Aligos Therapeutics, Inc. (NASDAQ:ALGS)
Hillhouse Capital Management’s Stake Value: $36,682,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 0.47%
Number of Hedge Fund Holders: 12
Aligos Therapeutics, Inc. (NASDAQ:ALGS) is a biotechnology company focusing on targeted antiviral therapies for chronic hepatitis B and liver disease. Chinese billionaire Lei Zhang elevated his stake in Aligos Therapeutics, Inc. by 10% in the third quarter, holding a total of 2.36 million shares worth $36.6 million. The stock accounts for 0.47% of Zhang’s Q3 portfolio.
In the third quarter of 2021, 12 hedge funds tracked by Insider Monkey were bullish on Aligos Therapeutics, Inc., up from 8 funds in the prior quarter. Vivo Capital is the biggest Aligos Therapeutics, Inc. stakeholder, with 3.5 million shares valued at $55 million.
Aligos Therapeutics, Inc. published its third quarter financial results on November 4, posting a loss per share of $0.78, beating estimates by $0.04. Revenue over the period came in at $1.54 million, exceeding analysts’ estimates.
Piper Sandler analyst Yasmeen Rahimi was “impressed” with the consistency in viral reduction and safety, which she believes sets up Aligos Therapeutics, Inc. to dose lower while retaining drug activity. The analyst reiterated an Overweight rating and a price target of $47 on the shares on December 7.
8. Tango Therapeutics, Inc. (NASDAQ:TNGX)
Hillhouse Capital Management’s Stake Value: $56,556,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 0.73%
Number of Hedge Fund Holders: 18
Tango Therapeutics, Inc. (NASDAQ:TNGX) is a new addition in the third quarter portfolio of Chinese billionaire Lei Zhang, with Zhang’s fund buying 4.37 million shares of the company, worth $56.5 million, representing 0.73% of the total investments at Hillhouse Capital Management. Tango Therapeutics, Inc. is a biotech company focused on the development of unique medicines for cancer treatment.
On November 9, Tango Therapeutics, Inc. posted its Q3 results. The company reported a loss per share of $0.28, in line with analysts’ consensus estimates. The $6.79 million revenue outperformed estimates by $380,750.
Among the hedge funds being tracked by Insider Monkey, 18 funds reported owning stakes in Tango Therapeutics, Inc., worth $338.6 million.
7. Illumina, Inc. (NASDAQ:ILMN)
Hillhouse Capital Management’s Stake Value: $67,986,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 0.88%
Number of Hedge Fund Holders: 55
Illumina, Inc. (NASDAQ:ILMN) is one of the best biotech stocks to buy according to billionaire Lei Zhang, with the company working on the analysis of genetic variation and biological function. Hillhouse Capital Management added Illumina, Inc. to its Q3 portfolio recently, buying 167,614 shares of the company, valued at $67.9 million, accounting for 0.88% of the firm’s total 13F securities.
Illumina, Inc. reported its financial results for Q3 on November 4, posting earnings per share of $1.45, exceeding estimates by $0.23. Revenue over the period jumped 39.55% from the prior-year quarter, reaching $1.11 billion, outperforming estimates by $63.05 million.
Baird analyst Catherine Ramsey Schulte lowered the price target on Illumina, Inc. on November 8 to $437 from $493 and kept a Neutral rating on the shares. The analyst observed that Illumina, Inc. reported a third quarter revenue ahead of consensus, driven by record clinical and research sequencing shipments, population genomics initiatives, and higher-than-expected COVID-19 surveillance contributions. However, the analyst is worried about tough comps heading into 2022.
At the end of September 2021, 55 hedge funds were bullish on Illumina, Inc., up from 51 funds in the preceding quarter. GuardCap Asset Management, the largest Illumina, Inc. stakeholder, boosted its stake in the company by 8% in Q3, with 1.3 million shares worth $534 million.
Here is what Polen Capital has to say about Illumina, Inc. in its Q3 2021 investor letter:
“Illumina shares underperformed on news that the company closed its acquisition of GRAIL despite regulatory reviews in the U.S. and EU that are still pending. We believe there is no precedent for applicable courts to use as a basis for validly concluding this acquisition violates antitrust law. Also, we think U.S. regulators were unnecessarily delaying their regulatory reviews in hopes of deterring Illumina and GRAIL from moving forward. Grail is still a pre-revenue business, and we believe it will be highly dilutive to Illumina’s earnings in the short term. Still, we expect Illumina’s core business to strengthen as a result of this acquisition. We also expect earnings accretion from GRAIL in the intermediate-term as its liquid biopsy test appears to be effective for early cancer detection across 50 of the most lethal cancers (most of which there are no tests for today).”
6. Beam Therapeutics Inc. (NASDAQ:BEAM)
Hillhouse Capital Management’s Stake Value: $126,004,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 1.64%
Number of Hedge Fund Holders: 20
Lei Zhang holds 1.44 million Beam Therapeutics Inc. (NASDAQ:BEAM) shares as of September 2021, worth $126 million, representing 1.64% of the billionaire’s total Q3 investments. Beam Therapeutics Inc. is a biotechnology company focused on developing advanced genetic medication, leveraging CRISPR technology to study and make changes to human DNA and RNA.
Among the elite hedge funds being tracked by Insider Monkey, Cathie Wood’s ARK Investment Management is the largest Beam Therapeutics Inc. stakeholder as of Q3 2021, with 6.84 million shares worth $595.2 million. Overall, 20 hedge funds were bullish on Beam Therapeutics Inc. in the third quarter, with stakes valued at $1.24 billion, as compared to 21 funds in the preceding quarter, holding stakes in Beam Therapeutics Inc. worth $1.77 billion.
On November 8, Beam Therapeutics Inc. announced its Q3 financial results, posting a loss per share of $0.42, exceeding estimates by $0.30. Revenue over the quarter increased 12,616.67% year-over-year, equaling $763,000, but missed estimates by $6.43 million.
SVB Leerink analyst Rick Bienkowski on October 19 initiated coverage of Beam Therapeutics Inc. with an Outperform rating and a $117 price target.
Just like Uber Technologies, Inc., Alibaba Group Holding Limited, and Mondelez International, Inc., Beam Therapeutics Inc. is a notable stock from Lei Zhang’s Q3 portfolio.
Here is what Baron Health Care Fund has to say about Beam Therapeutics Inc. in their Q1 2021 investor letter:
“Beam Therapeutics Inc. is a biotechnology company pioneering a novel technology called base editing, which allows for individual base pairs (the letters of DNA) to be modified. Shares fell along with other biotechnology stocks driven by a sudden rise in treasury yields. Early stage biotechnology stocks are particularly sensitive to interest rates because their cash flows are further in the future. We believe we are entering into a phase of significant advancement for the gene editing field that will eventually lead to curative therapies, and we think Beam has a unique platform technology.”
5. Cytek Biosciences, Inc. (NASDAQ:CTKB)
Hillhouse Capital Management’s Stake Value: $187,488,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 2.45%
Number of Hedge Fund Holders: 13
Cytek Biosciences, Inc. (NASDAQ:CTKB) is a biotech company specializing in cell analysis to develop treatments for cancer, in addition to cell biology research. Chinese billionaire Lei Zhang acquired a position in Cytek Biosciences, Inc. in the third quarter, buying 8.75 million shares of the company, worth $187.4 million. The stock accounts for 2.45% of the billionaire’s investments for Q3.
A total of 13 hedge funds were long Cytek Biosciences, Inc. at the end of September, with stakes valued at $524.5 million. Peter Kolchinsky’s RA Capital Management is the biggest Cytek Biosciences, Inc. stakeholder, holding 9.60 million shares worth $205.6 million.
On November 8, Cytek Biosciences, Inc. announced earnings for the third quarter, posting an EPS of $0.01, missing estimates by $0.01. Revenue over the period equaled $34.38 million, exceeding estimates by $1 million.
Cowen transferred coverage of Cytek Biosciences, Inc. on October 14 to analyst Max Masucci, who maintained an Outperform rating on the name.
4. BridgeBio Pharma, Inc. (NASDAQ:BBIO)
Hillhouse Capital Management’s Stake Value: $251,318,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 3.28%
Number of Hedge Fund Holders: 28
BridgeBio Pharma, Inc. (NASDAQ:BBIO) is a biotech company working on the development of unique drugs primarily for cardiovascular disease, genetic diseases, and cancer. Lei Zhang’s Hillhouse Capital Management owns 5.36 million BridgeBio Pharma, Inc. shares, worth $251.3 million, representing 3.28% of the firm’s Q3 portfolio.
Among the hedge funds being tracked by Insider Monkey, 28 funds were bullish on BridgeBio Pharma, Inc. in the third quarter, with stakes worth $2.1 billion. Andreas Halvorsen’s Viking Global is the biggest BridgeBio Pharma, Inc. stakeholder, with 26.6 million shares amounting to $1.24 billion.
H.C. Wainwright analyst Raghuram Selvaraju on December 28 lowered the price target on BridgeBio Pharma, Inc. to $24 from $88 as a result of one of the company’s drug trials failing, though he kept a Buy rating on the shares.
Publishing its Q3 results on November 4, BridgeBio Pharma, Inc. announced a loss per share of $1.06, missing estimates by $0.15. The revenue dropped 71.16% year-over-year, missing analysts’ consensus estimates.
Here is what Baron Opportunity Fund has to say about BridgeBio Pharma, Inc. in their Q2 2021 investor letter:
“BridgeBio Pharma, Inc. is a biotechnology company developing drugs that address a host of genetic disorders. Shares fell in the quarter given concerns around increasing competition. While we expect positive results from BridgeBio’s Phase 3 trial for its lead program for TTR amyloidosis, a disease in which toxic proteins build up in the heart and nerves, encouraging updates from Alnylam’s competing drug, Vitrusiran, and more recently, Intellia’s gene editing platform, pressured the stock. We exited our position.”
3. I-Mab (NASDAQ:IMAB)
Hillhouse Capital Management’s Stake Value: $520,685,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 6.80%
Number of Hedge Fund Holders: 18
I-Mab (NASDAQ:IMAB) is one of the top biotech stocks to buy according to billionaire Lei Zhang, with his hedge fund boosting its position in the company by 9% in Q3, holding a $520.6 million position. I-Mab is a Chinese biotech company working on the development of therapies for immuno-oncology and autoimmune diseases.
I-Mab announced on October 26 a partnership with Sinopharm Group Co., Ltd. (OTC:SHTDY) to improve its commercial capabilities and accelerate its commercialization transformation.
According to the Q3 database of 867 elite hedge funds monitored by Insider Monkey, 18 funds reported owning stakes in I-Mab, worth $837.7 million. One of the leading I-Mab stakeholders is Adage Capital Management, with the hedge fund elevating its position in the company by 46% as of September 2021, holding a $86.9 million stake.
2. Legend Biotech Corporation (NASDAQ:LEGN)
Hillhouse Capital Management’s Stake Value: $558,937,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 7.38%
Number of Hedge Fund Holders: 14
Another top biotech stock pick of Lei Zhang is Legend Biotech Corporation, with the billionaire increasing his stake in the company by 1601% in the third quarter, acquiring a total of more than 11 million shares in Legend Biotech Corporation, worth $558.9 million. The stock accounts for 7.38% of Zhang’s total Q3 investments. Legend Biotech Corporation is a company engaged in developing treatment for cancer and other chronic diseases using advanced cell therapy.
Piper Sandler analyst Edward Tenthoff on December 21 initiated coverage of Legend Biotech Corporation with an Overweight rating and a $66 price target. The analyst is confident about the FDA approval of the company’s upcoming drugs for multiple myeloma.
In the third quarter of 2021, 14 hedge funds were bullish on Legend Biotech Corporation, down from 19 funds in the preceding quarter. Baker Bros. Advisors is one of the leading stakeholders of the company, with a $119.5 million position.
1. BeiGene, Ltd. (NASDAQ:BGNE)
Hillhouse Capital Management’s Stake Value: $1,986,430,000
Percentage of Hillhouse Capital Management’s 13F Portfolio: 25.98%
Number of Hedge Fund Holders: 16
BeiGene, Ltd. (NASDAQ:BGNE) is the largest holding in billionaire Lei Zhang’s Q3 portfolio. Zhang’s Hillhouse Capital Management owns 5.4 million shares of BeiGene, Ltd., a biotech company specializing in the development of drugs for cancer, worth $1.98 billion, representing 25.98% of the firm’s total investments.
On October 12, Bernstein analyst Liang Rebecca initiated coverage of BeiGene, Ltd. with an Outperform rating and a $431 price target. The analyst covered the China biotech and pharma sector “with a positive stance based on the global opportunity.”
Billionaire Ray Dalio’s Bridgewater Associates is one of the largest BeiGene, Ltd. stakeholders as of Q3 2021, with the hedge fund elevating its stake in the company by 105%, holding 175,923 shares worth $63.8 million. Overall, 16 funds were long BeiGene, Ltd. in the third quarter.
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This article is originally published at Insider Monkey.
