The third quarter of 2015 was one of the worst periods that stocks from the healthcare sector have seen in the recent times. However, in spite of the turbulence they experienced in that period there is no denying the fact that healthcare and biotechnology have been two of the best performing sectors in the last four years. While the S&P 500 is up ‘only’ by 65.35% since the start of 2012, the S&P 500 Health Care boasts of returns of 105.5% and the NASDAQ Biotechnology Index is up by a whopping 213% during the same period. Due to its consistent outperformance, healthcare was renowned for a long time as one of the most preferred sector for some of the brightest minds (read -billionaires) in Wall Street to invest in. However, it was only in the third quarter when the stocks from the sector slumped hard, one actually saw the conviction that these billionaire investors have on their healthcare picks. Keeping that in mind, we at Insider Monkey thought to compile a list of the most popular healthcare stocks among billionaire investors going into the fourth quarter. Read further, to know which stocks made it to our list.
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 49% gain for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
#5 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)
Billionaires with Long Positions (as of September 30): 13
Aggregate Value of Billionaires’ Holdings (as of September30): $10.72 Billion
Although the number of billionaires covered by Insider Monkey that held a stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) remained constant during the July-September period, the aggregate value of their holdings in the company declined by 18.4% during the same period. Since Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock declined by 19.7% during the same period, one can safely assume that the decline witnessed in the aggregate value of billionaires’ holdings was mostly due to this correction in the stock. Continuing their decline in the fourth quarter, shares of Valeant Pharmaceuticals Intl Inc currently trade down more than 32% year-to-date. A major reason for the company’s stock decline in the last few weeks have been the recent allegations of accounting fraud against it. However, while other investors were selling the stock of the company after rumor of the alleged accounting fraud started spreading, revered activist investor Bill Ackman‘s Pershing Square Capital displayed its conviction in the stock by disclosing that it now owns 32.14 million shares or 9.9% of all common stock of the company in a regulatory filing last week.
#4 Walgreens Boots Alliance Inc (NASDAQ:WBA)
Billionaires with Long Positions (as of September 30): 14
Aggregate Value of Billionaires’ Holdings (as of September30): $5.68 Billion
Despite the aggregate value of billionaires’ holdings in Walgreens Boots Alliance Inc (NASDAQ:WBA) remaining nearly constant at the start and end of the third quarter, the number of billionaires tracked by us that disclosed a stake in the company jumped up by two during the same period. Shares of Walgreens Boots Alliance Inc (NASDAQ:WBA) have traded in the $80-$90 range for the most part this year and currently trade up 9.3% year-to-date. On October 28, the same day it reported its fiscal 2015 fourth quarter results, the company also announced that it would be acquiring smaller rival Rite Aid Corporation (NYSE:RAD) for $17.2 billion. On November 16, analysts at Credit Suisse reiterated their ‘Outperform’ rating on the stock, but lowered their price target to $100 from $110. Even after reducing its stake in the company by 6% to 23.27 million shares during the third quarter, billionaire Andreas Halvorsen‘s Viking Global remained the largest shareholder of the company among the funds covered by us at the end of that period.