Justin John Ferayorni’s Tamarack Capital Management has filed their latest 13F with the US Securities and Exchange Commission, revealing their long equity positions as of December 31 of last year. The top five is mostly unchanged from the end of the third quarter, when Endologix, Inc. (NASDAQ:ELGX) was the fund’s top pick, though one newcomer makes the top five (and a completely new position at that).
Justin Ferayorni founded Carlsbad, California-based Tamarack Capital Management in 2010, after previously working as an analyst and portfolio manager at Bricoleur Capital, and before that at John Galt Capital, Robertson Stephens & Co., and Atlantic-ACM. The hedge fund has a focus on the healthcare industry, with 73.4% of its equity tied up in the sector at the end of 2014. Tamarack increased many of its positions in the fourth quarter while opening several new ones as well, as the value of its equity portfolio jumped nearly 50%, to $659 million from $451 million at the end of the previous quarter.
Endologix, Inc. (NASDAQ:ELGX) remains Tamarack’s top long position, building it by 20% during the quarter to 3.96 million shares, giving them a 5.96% passive stake in the maker of healthcare devices specifically targeted for the treatment of aortic disorders, in particular abdominal aortic aneurysms, one of the highest causes of death in the United States.
Shares in the company went on a torrid run from the beginning of 2009 to the end of 2013, rising 1,628% during that five-year span. Since the beginning of 2014 however, shares have slid 17.25% on the back of weak financial results. Their most recent results, for the third quarter of 2014, came in below estimates, with reveue of $37.2 million and a net loss of $0.13 per share. The company will release its fourth quarter and full-year results for 2014 on February 25.
Quest Diagnostics Inc (NYSE:DGX) is a new position for Tamarack, and slides into the second spot on the listing of their most valuable positions. Quest Diagnostics is a stock that mostly treaded water for nearly a decade before finally breaking out in 2014, gaining 23.96% for the year, and has carried that momentum into 2015, up another 6.84% year-to-date.
Why did Quest Diagnostics Inc (NYSE:DGX) suddenly break out? They made great strides towards the end of 2013 to refocus their business on higher growth areas like esoteric testing, including selling off the royalty rights to ibrutinib for $485 million which generated a good deal of capital to return value to shareholders, including raising dividends another 10% beginning in April, 2014. Financials have also impressed, with the company’s recent preliminary full-year results revealing revenue of $7.44 billion for the year and earnings of $3.81 per share.
Quest Diagnostics Inc (NYSE:DGX) expects continued growth throughout 2015 as the uptake of patients through the Affordable Care Act continues to increase the potential pool of insured patients.
The Spectranetics Corporation (NASDAQ:SPNC) is bumped down to third by Quest Diagnostics Inc (NYSE:DGX), and Tamarack also cut their position in this stock by 10% to 1.03 million shares despite increasing its position in many others. Tamarack has profited greatly from this stock, first opening a position on it in the fourth quarter of 2012, when it was trading around $15.00. Since then it has gained more than 120% to $33.75.
Tamarack may simply be taking some profit from their trade, or it may feel the stock is about to peak. It is down 2.4% in trading year-to-date, and a number of company insiders have sold shares in recent months, which could indicate they feel the same. Despite that, analysts are still bullish on this stock, with CanAccord Genuity rating it a ‘Buy’ with a $41.00 price target on January 27, while JP Morgan raised their price target to $40.00 from $37.00 on December 5.
The Spectranetics Corporation (NASDAQ:SPNC) develops single-use medical devices that can be used in minimally invasive procedures, including singe-use laser catheters. It will release its 2014 fourth quarter results on February 19, with analysts expecting quarterly earnings per share of -$0.06.
Greatbatch Inc (NYSE:GB) is another company in the medical supplies and equipment field, and gets bumped up to fourth from fifth amonst Tamarack’s holdings, as it increased its position in the stock for the third straight quarter, most recently adding 9% to its position, giving it 519,000 shares. Greatbatch has been another success for Tamarack, up 13.31% in 2014, and another 2.76% year-to-date.
Greatbatch Inc (NYSE:GB) is another stock with a good deal of insider selling in the past few months as shares have hovered near all-time highs throughout that time. Greatbatch beat earnings estimates with their 2014 third quarter results of $0.64 per share, though revenue fell just shy of estimates at $171.70 million. That was an increase of 2.4% from the fourth quarter of 2013.
Lastly is Medtronic, Inc. (NYSE:MDT), a position which Tamarack opened during the third quarter of 2014. This has been yet another good position for Tamarack, as the stock has returned 20.95% since the beginning of the fourth quarter, with a particularly large jump being registered in the middle of November as they raised their outlook for fiscal 2015. Medtronic reported revenue of $17.01 billion in fiscal 2014, and expects revenue to rise 4% to $17.71 billion in fiscal 2015.
Medtronic, Inc. (NYSE:MDT) has received FDA approval for several treatments over the past couple months, including pre-market approval for their Transcatheter Pulmonary Valve, and approval for their IN.PACT Admiral drug-coated balloon, used for the interventional treatment of peripheral artery disease in the upper leg. The $105.7 billion market cap company also completed their acquisition of Covidien plc (NYSE:COV) at the end of January, a deal that was valued at just under $50 billion.