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Billionaire Halvorsen Makes 2 Big Bets on Natural Gas, While Take-Two Interactive and Eagle Pharmaceuticals Get Some Love

It is widely-known that hedge fund strategies vary quite a lot and thus so do their targets and bets. Some believe that we are entering an era of hedge fund outperformance, as the current state of the U.S equity markets is believed to be the perfect environment for these investment vehicles. Hedge funds’ ability to pinpoint stocks with an attractive risk-reward profile may be invaluable amid a rising interest rate environment and period of slow global growth. Having said that, the following article will discuss four 13G filings submitted with the SEC by the investment firms managed by Peter S. Park, Ricky Sandler, and Andreas Halvorsen.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).

Let’s begin our discussion by looking into the 13G filed by Peter Park’s Park West Asset Management LLC, which disclosed ownership of 791,041 shares of Eagle Pharmaceuticals Inc. (NASDAQ:EGRX). This is up by 290,450 shares from the position revealed by the fund’s 13F for the September quarter. The freshly-upped stake accounts for 5.1% of the company’s outstanding common stock. The shares of the pharmaceutical company that focuses on developing injectable products have advanced by 298% over the past year, so Park’s decision to further increase his firm’s stake may appear surprising.

Eagle Pharmaceuticals Inc. (NASDAQ:EGRX)’s product portfolio currently comprises three already-approved products, which include Argatroban, Ryanodex and Diclofenac-misoprostol, and an additional five advanced product candidates. The company’s total revenue for the nine months that ended September 30 totaled $48.05 million, compared to $13.61 million reported a year earlier. Similarly, its product sales for the first nine months of 2015 grew to $10.10 million from $2.40 million. The increase in product sales was mainly attributable to $1.4 million in net product sales of the company’s Diclofenac-misoprostol, which was launched back in January 2015. Analysts anticipate the company to generate earnings per share of $6.46 for fiscal year 2016, which generates a forward price-to-earnings ratio of just 11.70, which could explain why Park is still buying more shares despite the robust gains of the last year.

Not everyone is expecting even bigger things for the stock however. The number of smart money investors with positions in the pharmaceutical company dropped to 15 from 19 during the third quarter. James Dondero’s Highland Capital Management acquired a new stake of 239,508 shares of Eagle Pharmaceuticals Inc. (NASDAQ:EGRX) during the September quarter.

Peter S. Park
Peter S. Park
Park West Asset Management

The next two pages of this article discuss the other three 13G filings.