Healthcor Management LP is a New York-based healthcare-focused hedge fund founded by Arthur Cohen and Joseph Healey in 2005. Prior to forming the fund, both Cohen and Healey worked for Steve Cohen’s SAC Capital Advisors. Between 1995 and 2000, Cohen also served as the Managing Director at Julian Robertson’s Tiger Management, managing the healthcare investments of the fund. Healthcor Management LP recently filed its 13F with the SEC for the June 30 reporting date. According to the filing, Healthcor’s U.S public equity portfolio was worth over $1.98 billion at the end of June, with 90% of its holdings being in the healthcare sector. The fund had a very high turnover of almost 110%, having sold out of its stakes in 35 stocks, which initiating new positions in 23 stocks. In this article we are going to focus on Healthcor’s top three equity holdings at the end of the second quarter, which are also its top healthcare picks. They are Edwards Lifesciences Corp (NYSE:EW), HCA Holdings Inc (NYSE:HCA), and Mallinckrodt PLC (NYSE:MNK).
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Healthcor increased its position in Edwards Lifesciences Corp (NYSE:EW) by 340% to 1.1 million shares during the April-June period. As of June 30, this stake was worth $156.67 million. Edwards Lifesciences Corp (NYSE:EW) is a developer and manufacturer of heart valve systems . The company came out with better-than-expected second quarter results on July 28. It reported EPS of $1.13 on revenue of $616.80 million, compared to EPS of $1.05 on revenue of $604.97 million that the Street was expecting. On August 10 analysts at Credit Suisse reiterated their ‘Buy’ rating on the stock, while upping their price target to $162 from $150, which represents upside potential of about 13% over the current share price. Apart from Healthcor, another hedge fund that was bullish on the stock during the second quarter was Ken Griffin‘s Citadel Investment Group, which increased its stake in Edwards Lifesciences Corp (NYSE:EW) by 219% to almost 1.25 million shares.
HCA Holdings Inc (NYSE:HCA) was a new addition to Healthcor’s equity portfolio during the second quarter. The fund bought 1.35 million shares of the company, which were worth $122.47 million as of June 30. HCA Holdings Inc (NYSE:HCA) is one of the largest hospital operators in the United States. Shares of the company rose by 20.4% in the April-June period, mostly backed by the Supreme Court ruling in June that the U.S. federal government can continue to offer subsidies to U.S. citizens through the Affordable Healthcare Act (colloquially known as Obamacare). HCA Holdings Inc (NYSE:HCA) reported an earnings and revenue beat for the second quarter on August 5. EPS for the quarter came in at $1.37 on revenue of $9.90 billion, while analysts were expecting EPS of $1.34 on revenue of $9.82 billion. On August 14 the stock was reiterated as a ‘Buy’ by analysts at Mizuho Securities, who also upped their price target on it to $103 from $100, representing a potential 14% upside from the stock’s current trading price. Jeffrey Gates‘ Gates Capital Management also initiated a position in the stock by buying over 1.4 million shares during the second quarter.
Healthcor increased its position in Mallinckrodt PLC (NYSE:MNK) by 804% to 975,000 shares worth $114.77 million as of June 30. Mallinckrodt PLC (NYSE:MNK) is a Dublin, Ireland-based speciality pharmaceutical company. On August 10, it announced that it has agreed to buy Therakos Inc, an immunotherapy maker, in a $1.33 billion deal. Shares of Mallinckrodt have slumped by more than 20% since it reported its fiscal third quarter 2015 results on August 4, for the period ending June 30. Although the EPS of $2.05 the company reported was above analysts’ estimates of $1.82, revenue of $983.81 million, came in $18.71 million light of expectations. The stock was upgraded to a ‘Buy’ rating from ‘Market Perform’ by analysts at Leerink Swann on August 6. However, they lowered their price target to $112 from $133, which nonetheless represents a potential upside of over 15% from the stock’s current trading price. Even after reducing its position by 23% to over 6.5 million shares during the second quarter, John Paulson‘s Paulson & Co was the largest shareholder of Mallinckrodt PLC (NYSE:MNK) among the hedge funds we cover.
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