Artisan Partners Remains ‘Patient’ in Iovance Biotherapeutics (IOVA)

Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.36% was recorded by its Investor Class: ARTSX, 4.40% by its Advisor Class: APDSX, and 4.41% by its Institutional Class: APHSX for the second quarter of 2021, all above the Russell 2000® Growth Index that delivered a 3.92% return and the Russell 2000® Index that was up by 4.29% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Artisan Partners, the fund mentioned Iovance Biotherapeutics, Inc. (NASDAQ: IOVA) and discussed its stance on the firm. Iovance Biotherapeutics, Inc. is a San Carlos, California-based biopharmaceutical startup with a $3.8 billion market capitalization. IOVA delivered a -45.91% return since the beginning of the year, while its 12-month returns are down by -18.11%. The stock closed at $24.50 per share on September 3, 2021.

Here is what Artisan Partners has to say about Iovance Biotherapeutics, Inc. in its Q2 2021 investor letter:

Iovance is the leader in tumor infiltrating lymphocyte (TIL) development and manufacturing. A TIL is a type of immune cell capable of recognizing and killing cancer cells. In cancer therapy, tumor-infiltrating lymphocytes are removed from a patient’s tumor, grown in large numbers in a laboratory and then given back to the patient to help the immune system fight the disease. Iovance’s manufacturing process is efficient, reliable and scalable which enables commercialization of this therapy.

Iovance’s first commercial drug to treat metastatic melanoma, Lifileucel, is experiencing difficulty gaining FDA approval. Iovance is working with the FDA to develop new methods to meet the agency’s manufacturing requirements. Unfortunately, the company’s CEO resigned in mid-May, prompting some analysts on the Street to question how far off the company and FDA are in reaching alignment. The company is expected to meet with the FDA later this year, though the FDA has been strained by the pandemic and an approval for Lifileucel has likely been pushed into 2022. Given the strong data around Lifileucel’s efficacy, we believe the drug is de-risked, and we are remaining patient.”


Based on our calculations, Iovance Biotherapeutics, Inc. (NASDAQ: IOVA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IOVA was in 30 hedge fund portfolios at the end of the first half of 2021, compared to 37 funds in the previous quarter. Iovance Biotherapeutics, Inc. (NASDAQ: IOVA) delivered a 40.07% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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Disclosure: None. This article is originally published at Insider Monkey.