In this article, we discuss 10 Stocks to Buy According to Stephen DuBois’ Camber Capital Management.
In February 2006, Stephen DuBois, a former Ziff Brothers Investment Management employee, founded Camber Capital Management, a Boston-based long/short equities hedge fund manager. In addition, it might be considered an activist hedge fund due to its aggressive investment in Conceptus Inc. in 2011. The 13F portfolio of Stephen DuBois’ Camber Capital Management was worth almost $2.76 billion in the first quarter of 2022, with a top 10 holdings concentration of 57.66%. The hedge fund focuses mainly on the healthcare sector and invests in businesses that provide pharmaceuticals, medical devices, biotech, and healthcare services. That sector represented 81% of the total value of the hedge fund’s portfolio.
Everyone will eventually require healthcare, particularly when it comes to those in their later years. Needless to say, with populations aging in many developed markets, the need for healthcare and the potential for healthcare stocks is on the rise. The largest healthcare market in the world is the U.S, where expenditures on healthcare reached a record 19.7% of GDP in 2020, and is predicted to reach $6 trillion annually by 2028. In 2021, the Russell 3000 HealthCare Index, a gauge for the global healthcare industry, returned more than 20%. This demonstrated substantial growth when the world economy was still reeling from the effects of the Covid disaster.
However, in this article, we will discuss 10 stocks to buy according to Stephen DuBois’ Camber Capital Management. Some of the most notable securities in DuBois’ portfolio included GSK plc (NYSE:GSK), Medtronic plc (NYSE:MDT), and Incyte Corporation (NASDAQ:INCY).
A notable company in DuBois’ portfolio is GSK plc (NYSE:GSK). The company applied with the Japanese Ministry of Health, Labour, and Welfare (MHLW) on June 28 to seek approval for its Shingrix vaccine to prevent shingles in people aged 18 and older. Shingles, commonly known as herpes zoster, are caused by a relapse of the varicella-zoster virus, which also causes chickenpox.
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Another notable stock in DuBois’ portfolio is Medtronic plc (NYSE:MDT). The investor-owned a $55.48 million stake in the company. On June 1, however, Atlantic Equities analyst James Mainwaring reduced Medtronic plc (NYSE:MDT) from ‘Overweight’ to ‘Neutral’, with a price objective of $105, down from $125. According to Mainwaring in a research note, despite management’s efforts to offer cautious guidance in previous quarters, the business stayed locked in a negative earnings revision cycle following the Q4 miss.
Camber Capital Management owned 1.35 million shares of bio-pharmaceutical company Incyte Corporation. Stifel analyst Stephen Willey boosted his price objective on Incyte Corporation to $77 from $75 after the company’s Q1 results and maintained a ‘Hold’ rating on the stock.
Our Methodology
Here’s a look at the 10 stocks to buy according to Stephen DuBois’ Camber Capital Management, according to DuBois’ portfolio for the first quarter. In addition, we will examine the overall hedge fund opinion towards the firms in which DuBois is optimistic.
10 Stocks to Buy According to Stephen DuBois’ Camber Capital Management
10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Camber Capital Management’s Stake Value: $107,448,000
Percentage of Camber Capital Management’s Portfolio: 3.88%
Number of Hedge Fund Holders: 38
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a Deerfield, Illinois-based Anglo-Swiss-American holding corporation that owns the retail drugstore chains Walgreens and Boots, and many pharmaceutical production and distribution firms.
Among the hedge funds tracked by Insider Monkey, Camber Capital Management was the most significant Walgreens Boots Alliance, Inc. shareholder as of Q1 2022, with approximately 2.40 million shares worth $107.45 million, even after selling off 32% of its stake in the company. Camber Capital Management first acquired Walgreens Boots Alliance, Inc. shares in Q4 2020. In addition, 38 hedge funds were bullish on Walgreens Boots Alliance, Inc. at the conclusion of the March quarter, down from 42 funds in the prior quarter.
Morgan Stanley analyst Ricky Goldwasser maintained an ‘Underweight’ rating and a $43 price objective on Walgreens Boots Alliance, Inc. stock on July 1. In the company’s first quarter earnings report published on June 30, Walgreens Boots Alliance, Inc.’s EPS totaled $0.96, beating estimates by $0.03. In addition, its $32.6 billion in revenue exceeded estimates by $370 million.
GSK plc (NYSE:GSK), Medtronic plc (NYSE:MDT), and Incyte Corporation are some of the stocks to buy according to Stephen DuBois’ Camber Capital Management, along with Walgreens Boots Alliance, Inc..
Aristotle Capital Management mentioned Walgreens Boots Alliance, Inc. in its first quarter of 2022 investor letter. Here’s what the fund said:
“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”
9. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)
Camber Capital Management’s Stake Value: $111,120,000
Percentage of Camber Capital Management’s Portfolio: 4.01%
Number of Hedge Fund Holders: 24
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is a biotechnology firm specializing in discovering and developing RNA-targeted medicines. Catherine D. Wood’s ARK Investment Management was the leading shareholder of Ionis Pharmaceuticals, Inc. with 6.17 million shares worth over $228.59 million.
Do Kim of Piper Sandler boosted the firm’s price objective on Ionis Pharmaceuticals, Inc. to $55 from $54 on June 10 and reiterated an ‘Overweight’ rating on the stock. Some elite hedge funds have been dumping Ionis Pharmaceuticals, Inc. lately. In Q1 2022, the number of long hedge fund positions dropped to 24 from 26 in the prior quarter.
Camber Capital Management has owned a stake in Ionis Pharmaceuticals, Inc. since Q1 2021. The hedge fund increased its stake in Ionis Pharmaceuticals, Inc. by a significant margin, 116%, in the first quarter of 2022. The fund held a total of 3 million shares worth $111.12 million as of March 31, making Ionis Pharmaceuticals, Inc. the ninth-largest stock in its 13F portfolio.
8. Brookdale Senior Living Inc. (NYSE:BKD)
Camber Capital Management’s Stake Value: $112,800,000
Percentage of Camber Capital Management’s Portfolio: 4.08%
Number of Hedge Fund Holders: 32
Brookdale Senior Living Inc. (NYSE:BKD) owns and operates retirement homes nationwide. At the end of May 2022, Brookdale Senior Living Inc. reported a 90 bps rise in occupancy. The sequential weighted average occupancy increased by 70 basis points. Over 2,000 people moved in over the month.
Fund managers added to their Brookdale Senior Living Inc. holdings in the first quarter. According to Insider Monkey’s Q1 data, 32 hedge funds had long bets on Brookdale Senior Living Inc. as of March 31, compared to 31 funds in the preceding quarter.
Camber Capital Management held 16 million shares in Brookdale Senior Living Inc. worth over $112.80 million at the end of Q1, representing 4.08% of its investment portfolio. Another major stakeholder of Brookdale Senior Living Inc. was Glenview Capital, which owned 12.59 million shares.
7. Merck & Co., Inc. (NYSE:MRK)
Camber Capital Management’s Stake Value: $123,075,000
Percentage of Camber Capital Management’s Portfolio: 4.45%
Number of Hedge Fund Holders: 84
New Jersey-based pharmaceutical giant Merck & Co., Inc. was one of the companies in which Camber Capital Management reduced its holdings during the first quarter. The weighting of DuBois’ hedge fund in Merck & Co., Inc. decreased from 6.58% at the end of the fourth quarter of 2021 to 4.45% at the end of March. The hedge fund trimmed its stake in the firm by 40%, closing the first quarter with 1.50 million shares of Merck & Co., Inc..
On June 27, Cowen analyst Boris Peaker reaffirmed a ‘Market Perform’ rating on Merck & Co., Inc.’s stock while increasing his price target from $95 to $102.
Merck & Co., Inc. was in 84 hedge funds’ portfolios at the end of the first quarter of 2022. There were 80 hedge funds in our database with Merck & Co., Inc. holdings at the end of the prior quarter. The company’s largest Q1 shareholder was Ken Fisher’s Fisher Asset Management, with 11.83 million shares worth $970.82 million.
ClearBridge Investments mentioned Merck & Co., Inc. in its Q4 2021 investor letter. Here is what the fund said:
“Other pharma companies are providing solutions as well. Merck’s antiviral pill molnupiravir is less effective than Pfizer’s, but it will be a helpful alternative for patients who cannot take Pfizer’s due to drug-drug interactions. Merck is also helping to manufacture Johnson & Johnson’s COVID-19 vaccine, which has less stringent storage requirements than the mRNA vaccines do.”
6. Change Healthcare Inc. (NASDAQ:CHNG)
Camber Capital Management’s Stake Value: $130,800,000
Percentage of Camber Capital Management’s Portfolio: 4.73%
Number of Hedge Fund Holders: 50
Change Healthcare Inc. (NASDAQ:CHNG) specializes in healthcare technologies. The company focuses on transforming the healthcare system through its Change Healthcare platform. On June 1, Citi analyst Daniel Grosslight maintained a ‘Buy’ rating on Change Healthcare Inc. and boosted his price objective to $27.75 from $25.75.
Hedge funds had a bullish outlook on Change Healthcare, Inc. in Q1, as the stock was in 50 hedge funds’ portfolios at the end of the first quarter, up by two quarter-over-quarter. That’s also close to the stock’s all-time high level of ownership, which stands at 56. The most significant stake in Change Healthcare Inc. was held by David Abrams’ Abrams Capital Management, which reported having 16.98 million worth of CHNG as of the end of March.
DuBois’ Camber Capital Management boosted its Change Healthcare Inc. stake by 50% or 2 million shares during Q1. The hedge fund held 6 million shares worth $130.80 million as of March 31. At 4.73% of the fund’s 13F portfolio, Change Healthcare Inc. was Camber Capital Management’s sixth-largest stock pick. In Q4, Change Healthcare Inc. shares accounted for just 2.93% of the hedge fund’s portfolio value.
GSK plc (NYSE:GSK), Medtronic plc (NYSE:MDT), and Incyte Corporation are some of the stocks to buy according to Stephen DuBois’ Camber Capital Management, just like Change Healthcare Inc..
5. Gilead Sciences, Inc. (NASDAQ:GILD)
Camber Capital Management’s Stake Value: $148,625,000
Percentage of Camber Capital Management’s Portfolio: 5.37%
Number of Hedge Fund Holders: 68
Gilead Sciences, Inc. (NASDAQ:GILD) is an American bio-pharmaceutical company researching and creating antiviral medications used to treat COVID-19, hepatitis B, hepatitis C, influenza, and HIV/AIDS. Those medications include ledipasvir/sofosbuvir.
On May 23, David Risinger, an analyst at SVB Leerink, initiated coverage of Gilead Sciences, assigning a ‘Market Perform’ rating and a price objective of $68. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital stood as the largest shareholder of Gilead Sciences in the first quarter, with a $1.07 billion stake representing a 325% increase in holding size over the previous quarter.
Gilead Sciences, Inc. was in 68 hedge funds’ portfolios at the end of the first quarter of 2022, compared to 54 funds in the fourth quarter of 2021. Gilead Sciences, Inc. shares have lost 8.84% over the past 12 months as of July 4.
With an estimated net worth of $62.57 million, DuBois first picked up Gilead Sciences, Inc. for Camber Capital Management’s portfolio in the second quarter of 2016. The hedge fund increased its stake by 12% in Q1 to bring its total holding up to 2.50 million shares worth $149 million as of March 31.
In its Q4 2021 investor letter, ClearBridge Investments mentioned Gilead Sciences, Inc.. Here is what the firm said:
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences’ remdesivir, sold under the brand name Veklury, is a broad-spectrum antiviral medication administered by intravenous infusion; it can shorten the time to recovery in hospitalized patients and reduce the risk of hospitalization and death in non-hospitalized patients.”
4. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Camber Capital Management’s Stake Value: $172,665,000
Percentage of Camber Capital Management’s Portfolio: 6.24%
Number of Hedge Fund Holders: 33
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) develops, produces, and sells orthopedic reconstructive implants and surgical equipment. Elite hedge funds were less interested in Zimmer Biomet Holdings, Inc. at the end of the first quarter than they were a quarter earlier; 33 hedge funds disclosed having long positions in the business as of March 31, down from 43 funds a quarter earlier.
Camber Capital Management has held a stake since Q1 2021. In addition, the hedge fund turned bullish in the first quarter of 2022, as it upped the size of its Zimmer Biomet Holdings, Inc. holding by 35%, or 320,000 shares. With nearly 1.35 million shares worth $172.67 million as of March 31, Zimmer Biomet Holdings, Inc. stands in fourth position in the portfolio of DuBois’ Camber Capital Management.
Analyst Joanne Wuensch of Citi maintained a ‘Neutral’ rating on Zimmer Biomet Holdings, Inc.’s shares on May 17 and lowered her price target on them from $135 to $125. Wuensch warned investors in a research report that higher inflation, slower growth, and rising interest rates have caused market multiples to contract.
Ariel Investments, an investment management firm, mentioned Zimmer Biomet Holdings, Inc. in its Q4 2021 investor letter. Here is what the fund said:
“A reopening of the global economy with a reduction in the severity of the pandemic has led us to invest in companies that would perform well with an end to Covid restrictions such as canceled sports and entertainment events or companies that would benefit from pent-up demand for consumer products. Healthcare holdings such as Zimmer Biomet Holdings Inc. (ZBH) saw demand for their “elective” healthcare services decline sharply as hospitals lost capacity for non-essential surgeries or orthotics. We believed those companies should see a rebound in their business as cases decline. Unfortunately, two new Covid variants turned this theme from a tailwind to a headwind in the second half of the year. First, Delta then Omicron sent Covid cases higher and both companies saw their businesses slow again. Zimmer’s stock lost -13.04% in the fourth quarter. As we write, we believe Omicron cases could be nearing a peak which would allow our thesis to better play out this year.”
3. Sanofi (NASDAQ:SNY)
Camber Capital Management’s Stake Value: $205,360,000
Percentage of Camber Capital Management’s Portfolio: 7.42%
Number of Hedge Fund Holders: 19
Sanofi (NASDAQ:SNY) is a global French healthcare corporation headquartered in Paris, France. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) announced on July 1 that it had successfully acquired Sanofi’s interest in Libtayo. As a result, Regeneron Pharmaceuticals, Inc. would own the exclusive rights to produce the medicine that was first created in Regeneron’s research labs and commercialize it globally.
On June 7, UBS analyst Laura Sutcliffe maintained a ‘Buy’ recommendation on Sanofi, while increasing her price objective to EUR 119 from EUR 118. In addition, Camber Capital Management elevated its position in Sanofi by 6% in Q1 2022, holding 4 million shares worth over $205 million. The stock accounted for 7.42% of the fund’s total 13F portfolio.
According to Insider Monkey’s database, 19 hedge funds had a stake in Sanofi as of Q1 2022, with the total value of their holdings standing at $1.57 billion. Ken Fisher’s Fisher Asset Management held the most significant stake in Sanofi at the end of the first quarter of 2022, valued at $920.67 million.
Here’s what Dodge & Cox Stock Fund said about Sanofi in its Q3 2021 investor letter:
“Sanofi (3.5% position) is a diversified, global pharmaceuticals company with leading positions in vaccines, consumer health products, rare diseases, and emerging markets. Despite a favorable business mix, Sanofi has underperformed its peers in new product development, commercial execution, and profit growth. A new management team, recruited in 2018-19, has made progress turning the company around. Its drug pipeline is improving, targets for higher margins are being met, and earnings per share are growing. Sanofi also pays a 4% dividend yield, maintains a strong balance sheet, and has relatively low exposure to potential pressures from U.S. drug pricing.”
2. Universal Health Services, Inc. (NYSE:UHS)
Camber Capital Management’s Stake Value: $231,920,000
Percentage of Camber Capital Management’s Portfolio: 8.38%
Number of Hedge Fund Holders: 40
Universal Health Services, Inc. (NYSE:UHS) is a national supplier of hospital and healthcare services devoted to enhancing people’s lives and revolutionizing healthcare delivery. DuBois’ Camber Capital Management first acquired a position in Universal Health Services, Inc. in Q4 2012. It spent $44.99 on average for each share. The hedge fund sold 4% of its Universal Health Services, Inc. shares in the first quarter. With the sale of almost 50,000 shares, it ended the first quarter owning 1.60 million shares of Universal Health Services, Inc..
On July 1, Mizuho analyst Ann Hynes maintained a ‘Buy’ recommendation on Universal Health Services, Inc. while reducing her price target on UHS shares to $121 from $153. After polling 210 physicians across 14 specialties, the analyst concluded that nurse wage pressure remained a significant obstacle even if sequential volume trends continued to improve. Overall volumes were still below 2019 pre-pandemic levels.
Out of the hedge funds that are tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management was the leading shareholder of Universal Health Services, Inc., with 4.16 million shares worth more than $602.34 million.
Overall, 40 hedge funds owned positions in Universal Health Services, Inc. at the end of March with a collective value of $623.14 million. This was an increase of 5 hedge funds from the previous quarter, when 35 hedge funds owned stakes in Universal Health Services, Inc..
1. Viatris Inc. (NASDAQ:VTRS)
Camber Capital Management’s Stake Value: $250,240,000
Percentage of Camber Capital Management’s Portfolio: 9.05%
Number of Hedge Fund Holders: 55
Viatris Inc. (NASDAQ:VTRS) is a healthcare firm that operates globally. Viatris Inc. was losing popularity with the smart money in Q1, as the number of long hedge fund positions fell by 3. Viatris Inc. (NASDAQ:VTRS) was in 55 hedge funds’ portfolios at the end of March.
UBS analyst Ashwani Verma initiated coverage of Viatris Inc. on June 13, assigning a ‘Sell’ rating and $9 price target. The analyst said that given the company’s valuation, it faced significant downside risk since consensus predictions did not consider declining sales and EBITDA, sluggish spin-offs, and weaker dividend growth.
According to hedge fund data compiled by Insider Monkey, Laurion Capital Management had the most valuable position in Viatris Inc., worth close to $319.79 million, comprising 3.91% of its total 13F portfolio. Second on the list is Camber Capital Management, led by Dubois. The hedge fund upped its stake in Viatris Inc. by 44% in Q1. Camber Capital Management held 23 million shares worth $250.24 million as of March 31. At 9.05% of the portfolio – up from 7.43% in Q4 – Viatris Inc. is the largest holding of DuBois’ Camber Capital Management.
Davis Funds, an investment management firm, mentioned Viatris Inc. and discussed its stance on the firm in its Q4 2021 investor letter. Here is what the fund said:
“Davis Global Fund added several new positions over the past year, including the pharmaceutical Viatris. Viatris is an unloved global pharmaceutical manufacturer created through the merger of Mylan and Upjohn (Pfizer’s off-patent drugs business). The company is highly diversified, with leading positions across a wide span of generic and specialty/partnered drugs in many countries around the world. While growth for the portfolio overall is moderated by pricing pressures in traditional generics, Viatris has an attractive pipeline of complex drugs (e.g., inhaled drugs, injectables, etc.) and biosimilars, the latter of which are poised to see growth in the years ahead after a long period of regulatory and legal deadlock in the U.S.
Near-term, Viatris is committed to using free cash flow to pay down debt, but we believe its extremely cheap valuation (4–5x owner earnings) and growing cash generation offers a compelling risk/reward proposition that should eventually be recognized by the market.”
You can also take a peek at 7 Stocks to Buy According to Eduardo Costa’s Calixto Global Investors and 10 Stocks to Buy According to BlueSpruce Investments.
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This article is originally published at Insider Monkey.
