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Healthways, Inc. (HWAY): Point72 Discloses New 6.5% Position as Company Considers Strategic Options

Steve Cohen’s Point72 Asset Management disclosed a new position in Healthways, Inc. (NASDAQ:HWAY) in a filing with the SEC on Wednesday. The filing revealed Point72 now owns a 6.5% passive stake in Healthways, with an aggregate ownership of 2.32 million shares of common stock.

SAC CAPITAL ADVISORS

 

It’s the latest bullish move on a mid-sized company in the health and wellness field from Point72 Asset Management; as we reported on Tuesday, they have also taken strong positions in Zeltiq Aesthetics Inc (NASDAQ:ZLTQ) and Five Prime Therapeutics Inc (NASDAQ:FPRX) recently, opening up a new 5.0% stake in Five Prime with 1.27 million shares, and increasing their stake in Zeltiq to 5.2% with 1.96 million shares. We also learned this week that Cohen has interest in managing clients’ money again, and that executives with his Point72 fund will try and appeal to the SEC to limit any ban on managing outside capital to three years. Regulators have said they would seek to ban Cohen from ever doing so again.

That situation resulted from insider trading charges levied against members of Cohen’s S.A.C Capital Advisors last year, which forced him to close down his fund and return its investor capital, while shifting its personal assets to his new fund Point72, which is a family office that cannot accept outside clients but only manages its own assets. Despite Point72’s inability to take on new clients, the fund’s moves are still important to track, as S.A.C was one of the most successful hedge funds of its generation, producing average annualized returns of 25%.

In the Franklin, Tennessee-based Healthways, Inc. (NASDAQ:HWAY), Point72 is investing in a company that appears primed to take advantage of a health management industry that is estimated to swell to $50 billion. Numerous factors are leading the industry’s growth, including the aging of the population, and the increase in chronic diseases, which are tackled by Healthways through an approach that targets the patient’s physical, emotional, and social well-being. Of particular note is their patient retention rate, which is a strong 90%+.


For the third quarter of 2014, Healthways, Inc. (NASDAQ:HWAY) reported earnings that were in line with their own guidance and the estimates of analysts, with adjusted earnings per share remaining flat from the third quarter of 2013 at $0.08 per share. Adjusted net earnings meanwhile were up over 11% to $3.0 million from $2.7 million a year ago. Barrington Research has been the most recent analyst to rate stock, initiating coverage of it on January 22 with an ‘Outperform’ rating and $25 price target.

While the financial data and potential for growth is strong, it’s likely Point72 took interest in Healthways, Inc. (NASDAQ:HWAY) following the company’s press release and Form 8-K filed with the SEC on January 25, in which they disclosed that they were exploring strategic alternatives to increase shareholder value, and that the company’s board has retained the services of J.P. Morgan Securities LLC as its financial advisor to assist in evaluating such opportunities. While not explicitly stated in the press release, it’s possible one such option would be the sale of the company. Healthways, Inc. (NASDAQ:HWAY) did however warn that there is no guarantee that the board will end up taking any action, and that further information relating to their efforts would not be disclosed until such action is taken, or they complete their review without action.

Activity from the hedge funds we track was relatively bearish on Healthways in the third quarter, and rightfully so, as the stock slumped more than 10% between July 1 and November 28. However it’s up over 32% since then, and has been consistently achieving 52-week highs throughout the month of January. It is now attracting admiring gazes from some of the top investment minds in the business as a result, including Cohen’s. Other hedge funds we track with investments in Healthways, Inc. (NASDAQ:HWAY) include Conor Laughlin’s North Tide Capital with 3.85 million shares, Ross Margolies’ Stelliam Investment Management with 2.53 million shares, and Charles Clough’s Clough Capital Partners with 1.06 million shares.

Disclosure: None

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