Visium Asset Management has submitted its 13F filing with the SEC for the reporting period of March 31. The fund was founded in 2005 by Jacob Gottlieb and has a public equity portfolio valued at $6.78 billion as of the reporting period, along with an estimated $14.8 billion in assets under management. Visium invests heavily in healthcare stocks and is often tracked to identify stocks that have great potential in that sector. Unsurprisingly, the kind of growth that the healthcare sector has experienced over the past few years has made it popular with many investors. Over the past three years, the sector has delivered annualized returns of 27.08%, a development that has seen investors of all stripes dive into the sector. Insider Monkey has been keenly following the developments in the sector and has sifted through the 13F filings with the U.S. Securities and Exchange Commission for the aforementioned period. Visium had a high degree of turnover in its public equity portfolio during the past quarter and we’ve taken an in-depth look into some of its top stocks: Actavis PLC (NYSE:ACT), Laboratory Corp. of America Holdings (NYSE:LH), and Perrigo Company PLC Ordinary Shares (NYSE:PRGO).
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Visium can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 84 percentage points and returning over 144%, while hedge funds themselves have collectively underperformed the market (read the details here).
Let’s begin with Actavis PLC (NYSE:ACT), which landed on top of the list of the fund’s holdings as of March 31. The firm held a total of 1.46 million shares of the stock valued at $435.24 million, representing an enormous increase over the previous reporting period three months prior when it held only 728,397 shares with a value of $187.50 million. Actavis PLC (NYSE:ACT) has become quite a popular stock with investors, leading not only all other healthcare stocks with 157 of the investors we track having positions in it, but leading all companies, including Apple Inc. (NASDAQ:AAPL), which it knocked off of the top spot. Several brokerages and analysts have weighed in on the stock recently, with Citigroup Inc. giving it a “Focus List” rating (usually a firm’s highest rating) and a price target of $360 while analysts at Leerink Swann reiterated their “Outperform” rating for the stock and have updated their price target on the stock to $352 from $348. The company’s performance in the first quarter was quite impressive, registering a significant increase of 59% in net revenue to $4.2 billion year-over-year. Such results have convinced many investors to bet their money and that of their clients on the stock, including notable investors like Dan Loeb of Third Point and John Paulson of Paulson & Co.
Laboratory Corp. of America Holdings (NYSE:LH) came in second among Visium’s holdings with the firm owning 3.24 million shares valued at $408.82 million. Like several other stocks in the healthcare sector, it is expected to perform better in the second quarter of 2015, with predicted earnings per share of $2.03 after a first quarter in which it earned $1.73 per share. The stock was recently raised to a “Buy” rating from a “Hold” by analysts at Zacks, which has a price target of $135.00 on the stock. Analysts at JPMorgan raised their price target on the stock to $144.00 from $141.00 and issued an “Overweight” rating on the stock. Several other analysts have also either raised their price targets or upgraded their ratings on the stock. This is good news for individuals and organizations that have invested in Laboratory Corp. of America Holdings (NYSE:LH), which include Roberto Mignone‘s Bridger Management, March Altus Capital Management, and Healthcor Management LP.
Perrigo Company PLC Ordinary Shares (NYSE:PRGO) has become the third-largest holding of Visium Asset Management as of March 31. with the firm holding a total of 2.00 million shares valued at $330.86 million. The first quarter of 2015 saw the company post $1.85 in earnings per share, trouncing analysts’ consensus estimate of $1.78. That also easily beat the $1.31 in earnings per share registered by Perrigo Company PLC Ordinary Shares (NYSE:PRGO) in the same quarter last year. The total revenue of the company however came in slightly below analysts’ estimates at $1.05 billion against the $1.10 billion predicted. Thirteen brokerages that are currently covering the stock have given it a consensus rating of “Hold.” The average target price for the next twelve months among brokerages is $200 according to estimates issued within the past year, indicating limited potential upside of 5%. Discussions are currently underway for Mylan NV to purchase the company, although no deal has been finalized. After Perrigo Company PLC Ordinary Shares (NYSE:PRGO) rejected an offer by Mylan last month, the latter company plans to launch a hostile takeover bid that will let the shareholders of the former decide its fate. Among those shareholders of Perrigo’s stock are Pennant Capital Management, Highfields Capital Management, and Nancy Havens-Hasty‘s Havens Advisors.