In this article, we discuss the 5 healthcare stocks to buy according to billionaire D E Shaw. If you want to read our detailed analysis of Shaw’s history, investment philosophy, and hedge fund performance, go directly to the 10 Healthcare Stocks to Buy According to Billionaire D E Shaw.
5. Baxter International Inc. (NYSE:BAX)
D E Shaw Stake Value: $190,724,000
Percentage of D E Shaw’s 13F Portfolio: 0.17%
Number of Hedge Fund Holders: 42
Baxter International Inc. (NYSE:BAX), headquartered in Deerfield, Illinois, is an American international health care corporation. The company’s main emphasis is on kidney illness and other chronic and urgent medical diseases. D E Shaw started building its position in Baxter International Inc. (NYSE:BAX) in the fourth quarter of 2010 and currently holds over 2.37 million shares in the company, valued at $190.72 million. The company represents 0.17% of the hedge fund’s 13F portfolio.
In November, Baxter International Inc. (NYSE:BAX) declared a quarterly dividend of $0.28 per share, in line with the previous. In October, Piper Sandler analyst Matt O’Brien initiated coverage of Baxter International Inc. (NYSE:BAX), rating the stock as “Neutral,” and gave a price target of $82.
Baxter International Inc. (NYSE:BAX) was in 42 hedge fund portfolios in the third quarter of 2021.
In its third-quarter 2021 investor letter, Cooper Investors, an investment management firm, mentioned Baxter International Inc. (NYSE:BAX). Here is what the fund said:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop. …” (Click here to see the full text)
4. Merck & Co., Inc. (NYSE:MRK)
D E Shaw Stake Value: $266,419,000
Percentage of D E Shaw’s 13F Portfolio: 0.24%
Number of Hedge Fund Holders: 77
Merck & Co., Inc. (NYSE:MRK) is a multinational pharmaceutical corporation that develops, manufactures, and distributes medications for humans and animals.
In November, Morgan Stanley analyst Matthew Harrison cut his price target on Merck & Co., Inc. (NYSE:MRK) to $82 from $88 and maintained an “Equal Weight” rating on the stock, citing the new COVID variant Omicron as proof of the pandemic’s persistent variation risk. According to the analyst, mRNA vaccines, some antibody treatments, and Pfizer Inc.’s (NYSE:PFE) oral are the most likely to benefit.
Merck & Co., Inc. (NYSE:MRK) recently saw a decrease in hedge fund sentiment. The number of long hedge fund positions declined to 77 in the third quarter compared to 79 positions in the previous quarter.
In its first-quarter 2021 investor letter, Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK). Here is what the fund said:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
3. Amgen Inc. (NASDAQ:AMGN)
D E Shaw Stake Value: $267,103,000
Percentage of D E Shaw’s 13F Portfolio: 0.24%
Number of Hedge Fund Holders: 52
Amgen Inc. (NASDAQ:AMGN) is an American global biopharmaceutical corporation. Amgen Inc. (NASDAQ:AMGN) declared a quarterly dividend of $1.94 per share on December 3, up 10.2% from the previous payout of $1.76.
On December 6, Salveen Richter of Goldman Sachs initiated coverage of Amgen Inc. (NASDAQ:AMGN), rating the stock as “Buy” rating and gave a price target of $258.
As of the end of the third quarter of 2021, 52 hedge funds in Insider Monkey’s database held stakes in Amgen Inc. (NASDAQ:AMGN), compared to 53 funds in the earlier quarter.
Two Sigma Advisors, with 1.85 million shares, is the most significant stakeholder in Amgen Inc. (NASDAQ:AMGN).
In its third-quarter 2021 investor letter, Smead Capital Management mentioned Amgen Inc. (NASDAQ:AMGN). Here is what the fund said:
“Our poor performers for the quarter were quite eclectic. Amgen (AMGN) suffered a 12% decline from the Delta variant of COVID-19 retarding doctor visits and reducing new prescriptions.”
2. Moderna, Inc. (NASDAQ:MRNA)
D E Shaw Stake Value: $290,093,000
Percentage of D E Shaw’s 13F Portfolio: 0.26%
Number of Hedge Fund Holders: 49
Moderna, Inc. is a biotechnology business that develops messenger RNA-based medicines and vaccines for infectious illnesses, immuno-oncology, rare diseases, cardiovascular disorders, and auto-immune diseases. On December 6, Cowen analyst Tyler Van Buren initiated coverage of Moderna, Inc. (NASDAQ:MRNA), rating the stock as “Market Perform” and gave a price target of $250.
Out of the hedge funds being tracked by Insider Monkey, Coatue Management is a leading shareholder in Moderna, Inc. (NASDAQ:MRNA) with 6.05 million shares worth more than $2.33 billion. Even after selling 920,545 shares of Moderna, Inc. (NASDAQ:MRNA) in the third quarter, D E Shaw still holds 753,763 shares worth about $290.09 million.
Overall, hedge funds are loading up on Moderna, Inc. (NASDAQ:MRNA), as 49 out of the 867 funds tracked by Insider Monkey held stakes in the biotech company, compared to 37 funds a quarter earlier.
Carillon Tower Advisers, an investment management firm, in its third-quarter 2021 investor letter, mentioned Moderna, Inc. (NASDAQ:MRNA). Here is what the fund said:
“Moderna is a biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines. The stock proved to be an impressive contributor once again in the quarter, as investors continue to evaluate the potential for future growth driven primarily by the firm’s revolutionary COVID-19 vaccine. Strong global demand for the vaccine may persist for the foreseeable future in order to maintain immunity as well as provide protection against any additional future variants. The potential for the firm’s mRNA technology to be used in a number of other use cases, specifically influenza, could also provide an additional tailwind for future growth.”
1. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
D E Shaw Stake Value: $311,017,000
Percentage of D E Shaw’s 13F Portfolio: 0.28%
Number of Hedge Fund Holders: 55
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a Boston, Massachusetts-based biopharmaceutical business. In December, RBC Capital analyst Brian Abrahams raised his price target on Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to $265 from $250 and kept an “Outperform” rating on the shares.
The hedge fund chaired by D E Shaw holds close to 1.71 million shares in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) worth over $311.02 million. D E Shaw’s stake in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) shares increased by 121% in the third quarter of 2021.
With 1.89 million shares worth more than $343.10 million, New York-based investment company Renaissance Technologies is the largest stakeholder in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) among the hedge funds tracked by Insider Monkey.
In its second-quarter 2021 investor letter, Artisan Partners mentioned Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Here is what the fund said:
“Turnover in the portfolio was low in Q2, but we did initiate a position in biotechnology firm Vertex Pharmaceuticals. Vertex dominates the market for treatment of cystic fibrosis with limited competition. Shares were under pressure at the time of purchase, driven by recent regulatory hurdles and Vertex’s decision not to pursue late-stage development of VX-864 after an unexpectedly unfavorable outcome. VX-864 is designed to treat alpha-1 antitrypsin deficiency (AATD), which is an inherited disorder with a strong correlation to pediatric liver disease. Irrespective of Vertex’s AATD pipeline, the company has nearly two decades of patent protection remaining for its cystic fibrosis franchise. Management maintains a healthy reserve of cash and is focusing on research and development. We believe near-term growth is likely to be driven by Vertex’s expanding geographic presence and expansion of medicines to lower age groups with longterm gains rising from the company’s diversifying pipeline.”
You can also take a peek at 10 Healthcare Stocks to Buy According to Mario Gabelli and 10 Best Healthcare Stocks to Buy According to Matthew Halbower’s Pentwater Capital Management
