Five Healthcare Stocks Hedge Funds Like

Times are tough for healthcare stocks as investors keep a distance from the sector following drug-pricing control concerns and political clamor. However, analysts think that as the overpricing factor trims, healthcare stocks become feasible to accumulate as long positions. For this article, we have used data from the latest round of 13F filings and have identified five healthcare stocks that ranked as the most popular among the investors we track at Insider Monkey.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Allergan plc Ordinary Shares (NYSE:AGN)

– Number of Hedge Funds Having Long Positions (as of June 30): 131

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $13.9 billion

New Jersey-based Allergan plc Ordinary Shares (NYSE:AGN) remained a favorite healthcare stock in the second quarter, with 130 hedge funds bullish on the company at the end of the second period, however below than 170 hedge funds a quarter earlier. Earlier this month, financial services company Mizuho upgraded Allergan (NYSE: AGN) to ‘Buy’ from ‘Hold’ and upped its price target to $318 from $246. For the second quarter, Allergan reported EPS of $3.35 on $3.68 billion in revenue, missing the Street’s consensus estimates of $3.34 $4.1 billion. Earlier this month, Allergan announced its plan to acquire ForSight Vision5, a privately-held biotech firm for which it will pay $95 million up-front plus a milestone payment next year if ForSight’s innovative glaucoma treatment device receives FDA approval. The stock has lost over 23% so far this year.

Pfizer Inc. (NYSE:PFE)

– Number of Hedge Funds Having Long Positions (as of June 30): 94

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $5.66 billion

New York-based Pfizer Inc. (NYSE:PFE) reported a 15% year-on-year jump in revenue for the first six months of 2016, which amounted to $26.15 billion, mainly due to its $17 billion acquisition of Hospira, the world’s largest provider of injectable drugs. The company has also recently confirmed its acquisition Medivation Inc (NASDAQ:MDVN) for $14 billion, a deal that gives Pfizer three drugs related to the oncology market, which is expected to grow 7.5% to 10.5% annually through 2020. Medivation’s prostate-cancer treatment Xtandi has posted $2.2 billion in sales last year. Pfizer Inc. (NYSE:PFE)’s stock is up by over 7% so far this year. Ken Fisher’s Fisher Asset Management owns 31.72 million shares of Pfizer as of the end of the second quarter.

On the next page, we will continue our discussion of important healthcare stocks which got the attention of hedge funds in the second quarter.

Gilead Sciences, Inc. (NASDAQ:GILD)

– Number of Hedge Funds Having Long Positions (as of June 30): 85

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $3.13 billion

It’s been a tough year for Gilead Sciences, Inc. (NASDAQ:GILD), with its stock going down as much as 20% year-to-date, but analysts think that the company’s potential in Hepatitis C market makes it a strong candidate for a comeback in the near future. Moreover, sales of HIV drugs grew by double digits in the last quarter. Back in June, FDA approved Epclusa, Gilead’s Hepatitis C treatment drug. The company reported second quarter EPS of $3.08 on $7.78 billion in revenue, versus the consensus estimates of $3.02 and $7.79 billion, respectively. Last week, Gilead’s treatment of pulmonary arterial hypertension was granted orphan drug status by the FDA.

Johnson & Johnson (NYSE:JNJ)

– Number of Hedge Funds Having Long Positions (as of June 30): 82

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $5.58 billion

Of the total number of funds tracked by us, 82 funds held shares of the New Jersey-based healthcare conglomerate Johnson & Johnson (NYSE:JNJ), compared to 77 funds a quarter earlier. The company earned $1.74 a share in the second quarter, above the estimates of $1.68. For the full year, Johnson & Johnson (NYSE:JNJ) expects EPS of $6.63-$6.73, versus the consensus of $6.61. The stock is up over 15% year-to-date. At the end of the second quarter, Ken Fisher’s Fisher Asset Management had 10.84 million shares of Johnson & Johnson.

Biogen Inc (NASDAQ:BIIB)

– Number of Hedge Funds Having Long Positions (as of June 30): 73

– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $4.04 million

Biogen Inc (NASDAQ:BIIB) was liked by hedge funds during the second quarter. A total of 73 investors tracked by Insider Monkey held $4.04 million worth of Biogen’s stock at the end of the second quarter, up from 64 funds a quarter earlier. The company plans to spin off its hemophilia drug business next year.  Biogen Inc (NASDAQ:BIIB)’s stock has been rallying recently on the back of rumors suggesting a possible from companies like Merck & Co. and Allergan.

 

Disclosure: None