According to the Schulte, Roth & Zabel’s Activist Investing 2015 Annual Review, 344 companies were targeted by activist investors in 2014, as compared with 291 recorded a year earlier. Shareholder activism has been surging in recent years and will most likely intensify in the upcoming years, considering the consistent performance of activist investors and their small ownership in U.S. equities. More capital has been flowing into activist funds over the past several years, so U.S. equity markets will most likely witness an extension of the shareholder activism arena over the next years. Having this in mind, this article focuses on three 13D (activist) filings submitted with the SEC by several widely-known hedge funds monitored by Insider Monkey.
Following activist funds is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. An activist fund can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activist hedge funds have been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 38 months since our small-cap strategy was launched it has returned over 102% and beaten the S&P 500 ETF (SPY) by more than 53 percentage points (read more details). Soon, we’ll be releasing a new quarterly newsletter written by former activist hedge fund analyst Michael Bland that tracks ten or so activist campaigns at any given time.
According to a Schedule 13D filing, Baker Bros. Advisors, managed by Julian and Felix Baker, owns 4.87 million shares in Bellicum Pharmaceuticals Inc. (NASDAQ:BLCM), which account for 18.4% of the company’s outstanding common stock. This compares with the 4.19 million-share position disclosed in the fund’s latest 13F filing. This clinical stage biopharmaceutical company that focuses on discovering and developing novel cellular immunotherapies for different types of cancer has seen its shares decline by 12% this year. The company utilizes its proprietary Chemical Induction of Dimerization (CID) technology platform to engineer and control certain components of the immune system in real time. Nonetheless, Bellicum Pharmaceuticals Inc. (NASDAQ:BLCM) has not generated any product revenue just yet, but has recorded revenue from government grants. The company’s leading product candidate, BPX-500, is developed as an adjunct T-cell therapy that is administered after allogeneic hematopoietic stem cell transplant (HSCT) with the aim of improving transplant outcomes by speeding up the recovery of the immune system after an HSCT procedure. However, it is still a long road until this product candidate reaches the market, considering that BPX-501 is currently studied in several Phase ½ clinical trials in the U.S. and Europe. A total of 15 hedge funds from our database were invested in the biopharmaceutical company at the end of the third quarter, which amassed 30.40% of its outstanding shares. Israel Englander’s Millennium Management owns nearly 993,000 shares in Bellicum Pharmaceuticals Inc. (NASDAQ:BLCM) as of September 30.
Let’s move on to the next page of this article, where we discuss the 13Ds submitted by Leon Cooperman and Orbimed Advisors.