Insider Monkey strives to always keep investors updated on diverse stocks across different industries. Now that the 13F filings are in for the reporting period of March 31, we’ve been able to analyze the data and produce dozens of reports on the activity and trends among the best investors in the world. The healthcare sector is a popular one among investors at the moment given its sterling returns in recent years, including annualized returns of 27.08% over the past three years, while the S&P 500 returned 17.4% during that period. Needless to say, many hedge fund billionaires are heavily invested in the sector themselves, with Novus reporting that hedge funds (excluding quant-based funds) now have $289.67 billion invested in the sector and have gone from underweight to overweight over the course of the past year. In this article, we’ll take a look at the three most popular healthcare stocks among the billionaires in our database, which are Actavis plc (NYSE:ACT), Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pfizer Inc. (NYSE:PFE).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
The kind of growth and popularity that Actavis PLC (NYSE:ACT) has registered is overwhelming and that’s reflected in the amount of billionaires piling onto the stock. 26 billionaires had positions in Actavis on March 31, making it the most popular stock overall among billionaires and a staggering 44% higher than the next-most popular overall stock, which was Citigroup Inc (NYSE:C) with 18. Actavis’ CEO, Brent Saunders, is respected for his excellent management skills, while Actavis PLC (NYSE:ACT) also became particularly attractive after it acquired Allergan for $67 billion, the deal being completed in the first quarter. While the $10.52 billion that billionaires had invested in Actavis PLC (NYSE:ACT) was not their highest total overall (thanks primarily to several massive positions in other companies by Warren Buffett), it did stand as a big increase from the $6.20 billion they had invested in the company at the end of 2014.
Actavis’ 2014 performance beat analysts’ estimates and the company has continued to do the same in 2015, with profits for the first quarter of the year coming in at $4.30 per share, easily besting analysts’ forecast of $3.92. Andreas Halvorsen, Dan Loeb, and Barry Rosenstein are just a few of the billionaires with large positions in Actavis, while Stephen Mandel was one of the billionaires to open a new position in the stock during the first quarter.