In this article, we discuss the 10 healthcare stocks to buy according to billionaire DE Shaw based on Q3 holdings of his fund. If you want to skip our detailed analysis of Shaw’s history, investment philosophy, and hedge fund performance, go directly to the 5 Healthcare Stocks to Buy According to Billionaire DE Shaw.
David Elliot Shaw is a wealthy American scientist and hedge fund manager. Shaw received a bachelor’s degree summa cum laude from the University of California, San Diego, and a Ph.D. from Stanford University in 1980 before joining Columbia University’s computer science department as an assistant professor. Shaw made his fortune by utilizing cutting-edge high-speed computer networks to exploit inefficiencies in financial markets.
D E Shaw is a New York-based worldwide investment management hedge fund created in 1988 by David E. Shaw. It is one of the oldest hedge funds and one of the first to apply complicated mathematical trading algorithms. In 1996, Fortune magazine called the billionaire “King Quant” for his hedge fund’s pioneering role in high-speed quantitative trading.
D E Shaw has stakes in Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and Thermo Fisher Scientific Inc. (NYSE:TMO), among many other companies, as of the third quarter of 2021.
David E. Shaw of D.E. Shaw
Let’s start our list of 10 healthcare stocks to buy according to billionaire D E Shaw. We used Shaw’s fund’s 13F portfolio for Q3 2021 for this analysis.
Healthcare Stocks to Buy According to Billionaire D E Shaw
10. Cardinal Health, Inc. (NYSE:CAH)
D E Shaw Stake Value: $126,064,000
Percentage of D E Shaw’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 36
Cardinal Health, Inc. (NYSE:CAH) is a health-care services corporation that supplies pharmacies, hospitals, surgical centers, and physician offices with medications and other medical items.
D E Shaw cut its stake in Cardinal Health, Inc. (NYSE:CAH) by 11% in the third quarter. The fund still owns a $126 million stake in the company.
In the third quarter of 2021, the number of hedge funds that held stakes in Cardinal Health, Inc. (NYSE:CAH) was 36 out of 867 hedge funds tracked by Insider Monkey.
Like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and Thermo Fisher Scientific Inc. (NYSE:TMO), Cardinal Health, Inc. (NYSE:CAH) is one of the healthcare stocks gaining the attention of billionaire D E Shaw.
9. The Procter & Gamble Company (NYSE:PG)
D E Shaw Stake Value: $136,397,000
Percentage of D E Shaw’s 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 69
The Procter & Gamble Company’s (NYSE:PG) branded consumer packaged products serve consumers throughout North and Latin America, Europe, Asia Pacific, Greater China, India, the Middle East, and Africa. Grooming, Beauty, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care are the five segments in which it works.
In October, Deutsche Bank analyst Steve Powers decreased his price objective on The Procter & Gamble Company (NYSE:PG) to $160 from $163 and maintained a “Buy” rating. According to Powers, The Procter & Gamble Company’s (NYSE:PG) Q1 results fell short of expectations.
Overall, hedge funds are loading up on The Procter & Gamble Company (NYSE:PG), as 69 out of the 867 funds tracked by Insider Monkey held stakes in the company, compared to 68 funds a quarter earlier. Andy Brown’s Cedar Rock Capital is the most significant stakeholder in The Procter & Gamble Company (NYSE:PG), with 7.41 million shares worth $1.04 billion.
8. Medtronic plc (NYSE:MDT)
D E Shaw Stake Value: $157,045,000
Percentage of D E Shaw’s 13F Portfolio: 0.14%
Number of Hedge Fund Holders: 62
Medtronic plc (NYSE:MDT) is a medical technology firm that creates, manufactures, distributes, and sells device-based medical therapies and services.
In November, Truist analyst David Rescott lowered his price target on Medtronic plc (NYSE:MDT) to $142 from $148 but kept a “Buy” rating on the shares.
D E Shaw started building its position in Medtronic plc (NYSE:MDT) in the second quarter of 2015 and currently manages over 1.25 million shares in the company, valued at $157.05 million. The company represents 0.14% of the hedge fund’s 13F portfolio. In the third quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $2.28 billion in Medtronic plc (NYSE:MDT).
7. Illumina, Inc. (NASDAQ:ILMN)
D E Shaw Stake Value: $165,830,000
Percentage of D E Shaw’s 13F Portfolio: 0.14%
Number of Hedge Fund Holders: 55
Illumina, Inc. (NASDAQ:ILMN) develops, manufactures, and sells life science instruments and systems for large-scale genetic variation and function investigation.
In November, Baird analyst Catherine Ramsey Schulte trimmed her price target on Illumina, Inc. (NASDAQ:ILMN) to $437 from $493 and maintained a “Neutral” rating on the shares. She is encouraged by the apparent strength of underlying demand, but she is apprehensive about intense competition in 2022.
Illumina, Inc. (NASDAQ:ILMN) has recently seen an increase in hedge fund sentiment. Illumina, Inc. (NASDAQ:ILMN) was in 55 hedge fund portfolios in the third quarter of 2021 compared to 51 in the previous quarter.
In its third-quarter 2021 investor letter, Polen Capital mentioned Illumina, Inc. (NASDAQ:ILMN). Here is what the fund said:
“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. Cerner Corporation (NASDAQ:CERN)
D E Shaw Stake Value: $184,101,000
Percentage of D E Shaw’s 13F Portfolio: 0.16%
Number of Hedge Fund Holders: 36
Cerner Corporation (NASDAQ:CERN) creates, promotes, installs, hosts, and maintains health-care information technology, devices, hardware, and content for health-care organizations and consumers. In November, Baird analyst Vikram Kesavabhotla initiated coverage of Cerner Corporation (NASDAQ:CERN), rating the stock as “Neutral” and gave a price target of $82.
D E Shaw increased its hold in Cerner Corporation (NASDAQ:CERN) by 51% in the third quarter, ending the period with 2.61 million shares of the company. Overall, 36 hedge funds in Insider Monkey’s database of 867 funds are bullish on Cerner Corporation (NASDAQ:CERN).
Along with Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and Thermo Fisher Scientific Inc. (NYSE:TMO), Cerner Corporation (NASDAQ:CERN) is one of the healthcare stocks to buy according to billionaire D E Shaw.
In its first-quarter 2021 investor letter, Cooper Investors mentioned Cerner Corporation (NASDAQ:CERN). Here is what Cooper Investors has to say about Cerner Corporation in its letter:
“The investment in Cerner, made just over a year ago, was based on what we perceived to be a Low-Risk Turnaround opportunity as a refreshed management team sought to increase margins, reduce capex and utilise balance sheet latency with buybacks and acquisitions. Taking account of the tough 2020 for Cerner’s hospital client base the company did a reasonable job executing on these initiatives. However, moving into 2021 more recent observations around intentionality and focus led to a reassessment of the investment proposition, particularly relative to the portfolio’s other technology and software investments.”
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Disclosure: None. 10 Healthcare Stocks to Buy According to Billionaire DE Shaw is originally published on Insider Monkey.
