Incyte Corporation (INCY), Seattle Genetics, Inc. (SGEN) & Two More: Top Healthcare Hedge Fund Loves These Stocks

Baker Bros. Advisors is a fund managed by Julian Baker and Felix Baker that mainly invests in biotechnology companies, and today we are going to take a closer look at four of its favorite health picks, including Incyte Corporation (NASDAQ:INCY), Seattle Genetics, Inc. (NASDAQ:SGEN), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

At the end of June, the fund had an equity portfolio worth around $9.54 billion, and the weighted average returns of its stock picks amounted to 15.45% as per our calculations on the fund’s qualifying positions. It is worth mentioning that our measurements don’t count short positions and some other instruments, and are based on long positions in companies that are worth at least $1 billion, which in the case of Baker Bros. Advisors amounted to 30 holdings. Although these returns differ from the fund’s actual returns, they are still a valuable tool for analyzing the performance of the fund’s investment moves.

With this in mind, let’s examine the four above-mentioned health picks and see how they performed in the third quarter.

In bioharmaceutical company, Incyte Corporation (NASDAQ:INCY), Baker Bros. Advisors slightly raised its stake in the June quarter, adding 237 shares, and creating a stake that counted 23.5 million shares, which were worth $1.88 billion on June 30 and comprised 19.70% of its portfolio’s value. In the following three months, the stock advanced by 17.9%.

At Q2’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 16% drop from one quarter earlier. One of the largest stakes in the company was held by OrbiMed Advisors with a $185.9 million position. Other investors bullish on the company included Citadel Investment Group, Balyasny Asset Management, and Two Sigma Advisors.

Baker Bros. Advisors decided to raise its stake in Seattle Genetics, Inc. (NASDAQ:SGEN), a biotechnology company that mainly works on discovering therapeutics for the treatment of cancer. The fund added 3,700 shares of the stock in the June quarter, creating a stake that counted 43.24 million shares and was worth $1.75 billion at the end of the second quarter. In the following three months, the stock advanced by 33.7%, and over the past 12 months, it has gained 59.05%.

Heading into the third quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a 67% jump from one quarter earlier. Among the biggest investors in Seattle Genetics, Inc. (NASDAQ:SGEN) was Redmile Group, which amassed a stake valued at $55.8 million. Citadel Investment Group, Balyasny Asset Management, and Blue Jay Capital Management also held valuable positions in the company.

We’ll check out two more of the fund’s stock picks on the next page.

In ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), a biopharmaceutical company that works on the development and production of therapeutics for treating central nervous system disorders, Baker Bros. Advisors raised its stake by 1% to 24.52 million shares, which were worth $795.81 million, comprising 8.34% of its equity portfolio’s value. The stock delivered a negative return of 2% in the third quarter, being one of the few underperforming equities held by the fund.

Heading into the third quarter of 2016, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 19% decline from the first quarter of 2016. One of the most bullish investors in the company at the end of June was Palo Alto Investors, which amassed a stake valued at $46.7 million. Point72 Asset Management, Senator Investment Group, and Sabby Capital were also long the stock.

In the end, we are going to examine Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), in which Baker Bros. Advisors slightly boosted its stake as well. The fund added 696 shares during Q2, hence holding a position that counted 6.54 million shares at the end of June, and which was valued at almost $764 million. The fund’s investment was a good move, since the company advanced in value by 5% in the following three months.

At Q2’s end, a total of 46 of the hedge funds in our system were long Alexion, up by 24% from the first quarter of 2016. One of the largest stakes in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was reported by OrbiMed Advisors, managed by Samuel Isaly, which held a $348.1 million position; the fund had 3.6% of its 13F portfolio invested in the stock. Remaining professional money managers that were bullish comprised Ken Griffin’s Citadel Investment Group, Anand Parekh’s Alyeska Investment Group, and Israel Englander’s Millennium Management.

Disclosure: None