Biogen Idec Inc (BIIB), Celgene Corporation (CELG), bluebird bio Inc (BLUE): Stanley Druckenmiller Bets on Biotech and Wins

The majority of Mr. Druckenmiller’s picks are large-cap companies, which is why immitating his top holdings wouldn’t be a good idea for a smaller investor. This is confirmed by our empirical studies, which showed that an equity portfolio consisting of 50 most popular stocks among hedge funds underperformed the market by 7.0 basis points per month between 1999 and 2012. However, we have also found that a portfolio that consists of 15 most popular small-cap picks can beat the market by 1.0 percentage point per month. Based on this research we have developed a strategy that involves tracking 15 most popular small-cap stocks among over 700 hedge funds. We have beens sharing these stocks in our newsletters since August 2012 on a quarter-by-quarter basis and since inception, our strategy returned some 132% and beat the S&P 500 ETF (SPY) by roughly 79 percentage points.

Nevertheless, let’s take a closer look at Mr. Druckenmiller’s other two biotech favorites. In Celgene Corporation (NASDAQ:CELG), the investor held 434,100 shares valued at $48.56 million, which represents Duquesne’s sixth largest position. Both Biogen Idec Inc (NASDAQ:BIIB) and Celgene Corporation (NASDAQ:CELG) are among five biotech stocks that billionaires love, according to the last round of 13F filings. Aside from Duquesne, the company was also included in the equity portfolio of Orbimed Advisors, which owns 3.66 million shares, as of the end of 2014. Last week, Celgene Corporation (NASDAQ:CELG) also reported positive results from Phase 3 study of Oral OTEZLA, a drug for the treatment of psoriasis. The company has a positive outlook from analysts and last week Piper Jaffray raised the price target to $144 from $135, reiterating ‘Overweight’ rating. 

On the other hand, bluebird bio Inc (NASDAQ:BLUE) is one of Mr. Druckenmiller’s small cap picks from the biotech industry. During the fourth quarter, the investor initiated a stake with 355,400 shares, valued at $32.60 million. The $4.1 billion clinical-stage company focuses on developing gene therapies for severe genetic and rare disorders. The stock of the company surged by 83% at the beginning of December, after bluebird bio Inc (NASDAQ:BLUE) reported positive results from a trial of LentiGlobin BB305, a drug developed for the treatment of transfusion-depdendent patients with beta-thalassemi. This development helped bluebird bio Inc (NASDAQ:BLUE) capture the attention of investors, as during the fourth quarter the number of funds holding the stock increased by 8 to 30 and the aggregate value of capital held in the company by these funds surged to $482.92 million from $155.88 million in the previous quarter. Israel Englander’s Millennium Management raised its stake in the company by 300% during the last three months of 2014 to 546,300 shares. 

Disclosure: none