ACADIA Pharmaceuticals Inc. (ACAD), Pfizer Inc. (PFE): Sabby Management Rewarded for Its Healthcare Picks

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) spiked nearly 18% during Tuesday’s intraday trading and hit a 52-week high of $46.48. The price action was due to speculations that there might be an acquisition deal looming just around the corner, since the biopharmaceutical company cancelled its presentation at the Roth Conference. This was the second time that the company cancelled attending an event, the first one being the Cowen Conference on 3rd March. One investor, who was pleased with the news is Sabby Capital‘s Hal Mintz. He initiated a position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) just last quarter by purchasing some 864,400 shares valued at $27.45 million, according to Sabby’s latest 13F filing.

Acadia Healthcare Company Inc (NASDAQ:ACHC)

In fact, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has been able to spike the interest of prominent hedge fund managers during the fourth quarter. Among others, Ken Griffin’s Citadel Investment Group, increased its stake by 11% to around 896,600 shares valued at $28.47 million and Steven Cohen’s Point72 Asset Management, which also upped its stake by 11% to 1.02 million shares. Acadia is a biotechnology company focused on the development and commercialization of medicines to address unmet medical needs in neurological and related central nervous system disorders. The company is currently in Phase III developmental stage of its landmark drug Nuplazid, which could potentially become the first drug to treat Parkisnson’s disease in the U.S. That said, since at this time acquisition talks are merely a speculation, there could be a variety of other reasons why ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)’s management cancelled the conferences. These range from data to be presented still being in the preparation phase to even waiting for some sort of response from the FDA.

Even though ACADIA posted a net loss per share of $0.28 for the fourth quarter, it has sufficient cash locked up to fund the commercialization of Nuplazid itself, once the drug is approved. At the end of the quarter cash, cash equivalents and investment securities amounted to $322.5 million. If a deal is indeed on the cards, ACADIA is not going to sell itself cheaply.

Although founded recently in 2012, Sabby Capital’s principal and managing member, Hal Mintz has a considerable experience in investment finance. He  was co-general partner of the BAM Opportunity Fund L.P., which was launched in July 2002, and prior to that he was a proprietary equity derivative trader and limited partner for Orbit 2 Partners L.P, between 1996 and 2001. Mintz has a magna cum laude bachelor’s in business administration from the Olin School of Business at Washington University. Sabby Capital is health care focused hedge fund, with 87% of its holdings in that sector. It also had a particularly high turnover ratio of 60.08% during the fourth quarter. A total of 67 new positions were initiated, of which the top two in terms of value were Pfizer Inc. (NYSE:PFE) and  ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). Market Value of its portfolio stood at $3.17 billion.

The second noteworthy mention among Sabby Capital’s new  holdings is Pfizer Inc. (NYSE:PFE). Hal Mintz added some 1.25 million shares valued at $39.09 million of the global pharmaceutical company to his fund’s equity portfolio during the fourth quarter. Pfizer is up by 8.02% year to date as FDA accepted the company’s New Drug Application (NDA) for ALO-02 (oxycodone hydrochloride and naltrexone hydrochloride) in mid February; the drug  helps patients cope up with severe pain and is abuse deterrent. Among over 700 hedge funds that we track, Ken Fisher’s Fisher Asset management had the highest stake in the company at the end of last year that amounted to 31.20 million shares valued at $971.77 million.

Sabby Capital also initiated a new position in the health sector, represented by Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC), according to a new 13G filing. Mintz  purchased some 3.2 million shares or 9.3% of the company’s outstanding common stock. Alex Denner of Sarissa Capital Management also initiated a stake in Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) by adding 376,000 shares valued at $263,000 to his portfolio during the fourth quarter. The $33.36 million company is down nearly 87% during the last 52 weeks.

Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) is a small cap company, and our research has shown that small cap picks of hedge funds overwhelmingly outperform the market, as opposed to most popular picks of these investment firms, which mostly tend to be the large cap companies. We looked at the period between 1999 and 2012, and an equally weighted portfolio of 50 most popular hedge fund picks underperformed the market by 7 basis points per month. Using our analysis, the small-cap hedge fund strategy that we have formulated has outperformed the market by 76.7 percentage points over the 2.5 year period since August 2012.

Disclosure: none