Anders Hallberg and Carl Bennet’s healthcare-focused fund, Healthinvest Partners AB, recently disclosed its equity holdings in a 13F filing with the Securities and Exchange Commission. After some shuffling during the first quarter, the new top picks of the fund are Magellan Health Inc (NASDAQ:MGLN), Pfizer Inc. (NYSE:PFE), Anthem Inc (NYSE:ANTM), Aetna Inc (NYSE:AET), and LifePoint Hospitals, Inc. (NASDAQ:LPNT).
Founded in 2006, Healthinvest AB invests in healthcare companies that are market leaders in the segments that they operate in. The fund’s investing strategy thus entails that it avoids investing in companies with pending clinical experiments, which are naturally a riskier option. Moreover, Healthinvest seeks to invest in smaller-sized companies, since it believes that it provides an informational advantage owing to less analysts covering them. Through the fund’s own financial analysis, which is more focused on free cash flow than earnings, the analysts seek out the the companies trading at discounted valuations, and invests in them with a long term perspective. The market value of the fund’s equity portfolio at the end of the second quarter stood at $144.37 million.
Before we move on to Healthinvest’s top picks, it is noteworthy that the fund’s focus on small caps is the same strategy that we have been advising to retail investors for quite a while now. Through our research, we discovered that a portfolio of the 15 most popular small cap picks of hedge funds can beat the S&P 500 Total Return Index by nearly a percentage point per month between 1999 and 2012. On the other hand the most popular large cap picks of hedge funds underperformed the same index by 7 basis points per month during the same period. In forward tests since August 2012 through March 2015 top small-cap stocks beat the market by a hefty 79.4 percentage points and returned more than 130% (read the details here).
With 260,606 shares valued at $18.46 million, Magellan Health Inc (NASDAQ:MGLN) represents Healthinvest’s largest holding. Hallberg and Bennet bumped the exposure of their fund by 58% during the last quarter. The $1.94 billion healthcare management company has appreciated by nearly 18.16% year to date. Magellan Health Inc (NASDAQ:MGLN) recently completed the acquisition of privately held pharmacy benefit manager (PBM), 4D Pharmacy Management Systems, Inc. The largest stockholder of Magellan Health Inc (NASDAQ:MGLN), among the funds that we track, is Samuel Isaly‘s Orbimed Advisors holding about 1.2 million shares as of the end of 2014.