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Elite Hedge Funds Make Bigger Moves Into These 2 Stocks

Neal C. Bradsher‘s Broadwood Capital revealed in a recent Form 4 filing with the SEC that it has purchased an additional 2.43 million shares of BioTime, Inc. (NYSEMKT:BTX) in a registered direct offering, at a price of $3.29 per share, increasing its holding to more than 20.26 million shares. Following this transaction, Broadwood Capital now owns 25.5% of the outstanding shares of BioTime, Inc. (NYSEMKT:BTX), worth above $71.5 million at their current market price. In a separate form 4 filing, Julian Baker and Felix Baker‘s Baker Bros. Advisors disclosed that it has acquired an additional 50,000 shares of Mirati Therapeutics, Inc. (NASDAQ:MRTX) in a direct share offering, at a price of $45 per share and now owns over 2.95 million shares, representing almost 18% of the outstanding shares. Based on Mirati Therapeutics, Inc. (NASDAQ:MRTX)’s current share price, this stake is worth $131 million.

Felix Baker - Baker Bros.

Neal C. Bradsher started Broadwood Capital, a New York-based healthcare-focused hedge fund, in 2002 after serving as a portfolio manager at Whitehall Asset Management and Campbell Advisors. According to the fund’s latest 13F filing, its U.S public equity portfolio was worth around $590 million and consisted of only six stocks. Although the fund has been a shareholder of BioTime, Inc. (NYSEMKT:BTX) for more than ten years and has continuously increased its stake in the company during that period, BioTime, Inc. still doesn’t land in the top three holdings of the fund. At the end of June, Monster Beverage Corporation (NASDAQ:MNST) and Mallinckrodt PLC (NYSE:MNK) represented Broadwood Capital’s largest holdings, respectively.

Neal C. Bradsher
Neal C. Bradsher
Broadwood Capital

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 117% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

BioTime, Inc. is a California-based, mid-sized biopharmaceutical company that focuses on the field of regenerative medicine. Even after suffering a sharp decline from May until August, the stock of BioTime is only down by 5.11% year-to-date, thanks to the over 35% rise it had during the first four months of the year.  Since the company announced the direct offering of slightly above 2.6 million shares on September 14, it is clear that Broadwood Capital was the major beneficiary of this direct offering. For the second quarter of 2015, BioTime reported a loss of $0.12 per share on revenue of $2.01 million, compared to a loss of $0.16 per share on revenue of $1.11 million that it reported for the same quarter last year. The number of hedge funds among those we track that reported a stake in the company went up by three to 14 during the second quarter. Israel Englander‘s Millennium Management was one of the hedge funds that initiated a stake in the company during that period, and held 63,094 shares of BioTime at the end of June.

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