DURECT Corporation (DRRX): First Eagle Raises Its Stake; See Investor’s Other Healthcare Picks

As a new filing with the Securities and Exchange Commission showed, Jean-Marie Eveillard‘s First Eagle Investment Management has increased its stake in DURECT Corporation (NASDAQ:DRRX) to 13.13 million shares. The passive stake that accounts for 11.54% of the company’s common stock was increased from 10.71 million shares the fund held at the end of 2014.

DURECT Corporation (NASDAQ:DRRX) is a nano-cap pharmaceutical company that develops specialty drugs based on its proprietary drug delivery technology platform. For the last year, the company posted a revenue growth to $19.4 million from $15.3 million a year earlier and a net loss of $22.1 million, wider than $21.5 million in 2013. On the back of the results, the company’s stock surged and is currently up by over 110% since the beginning of the year, although over the last 52 weeks it gained only 10%, which is significantly below the specialy & generic drug manufacturers’ industry return of 41%.

First Eagle initiated a stake in DURECT Corporation (NASDAQ:DRRX) during the first quarter of 2012 and initially held 1.94 million shares. However, as the stock almost doubled since the end of March 2012, the fund significantly increased its exposure to the company. Another investor that is bullish on Durect Corporation is healthcare-focused Broadfin Capital, led by Kevin Kotler, which holds 4.40 million shares as of the end of 2014. However, due to the small size of the company, in the equity portfolios of all funds that we track the stake in DURECT Corporation (NASDAQ:DRRX) represents a very small percentage of total value.

First Eagle has a very large equity portfolio that is valued at more than $41 billion as of the end of 2014 and contains over 350 positions. The investor prefers to hold stakes in Technology, Materials, Finance, Energy, and Consumer Discretionary stocks, which amass around 80% of its equity portfolio,  but it also invests smaller amounts in other sectors, such as Healthcare, about which we are going to talk next. Therefore, according to its last 13F filing, First Eagle held around 7% of its equity portfolio in Healthcare stocks, the majority of which are large-cap companies. Three largest healthcare positions held by the fund as of the end of last year are represented by Actavis plc (NYSE:ACT), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and Johnson & Johnson (NYSE:JNJ).