PTC Therapeutics, Inc. (PTCT): Brookside Capital Ups Exposure in a Profitable Investment

In a new filing with the Securities and Exchange Commission, Bain Capital‘s Brookside Capital disclosed increasing its activist stake in PTC Therapeutics, Inc. (NASDAQ:PTCT). The investor reported holding a total of 2.76 million shares of the company after the acquisition of some 528,700 shares of the company in a recent public offering of common stock. The position is held in aggregate by Brookside Capital Partners Fund and Brookside Capital Trading fund, both of which are managed by Brookside Capital Partners. The stake amasses 8.34% of PTC Therapeutics’ common stock.


The fund purchased shares in seven transactions, spending around $12.08 million in total, as the filing added. PTC Therapeutics, Inc. (NASDAQ:PTCT) announced its underwritten public offering last week, issuing 3.0 million shares sold at a price of $36.25 per unit excluding underwriting discounts. Underwriters still have 30 days to purchase 450,000 shares under over-allotment option. Last year, Brookside Trading Fund acquired 1.25 million shares of the company also under the terms of an underwritten public offering. Overall, the investor has been holding shares of the company since the third quarter of 2013, disclosing initially the ownership of 2.33 million shares. The stock of PTC Therapeutics more than doubled since then and Brookside trimmed its position from 2.86 million shares held as of the end of June.

Despite the fact that Bain Capital is an activist fund that seeks to invest in ‘misunderstood’ companies and increase their value through improving their operations, Brookside is a long/short public equities fund that uses fundamental analysis and industry analysis to invest accross all economic sectors. Brookside manages over $4.0 billion in equity portfolio and around $11 billion in Assets Under Management. So far, the fund’s three top holdings are from the technology sector, and have provided good returns. Brookside initiated a stake in Air Products & Chemicals, Inc. (NYSE:APD) at the beginning of the year, the stock advancing by 14% year-to-date. Also, during the second quarter of the year, the fund added Cisco Systems, Inc. (NASDAQ:CSCO) during the second quarter, while the stock inched up by 2% since then. Moreover, the third-largest holding is represented by Broadcom Corporation (NASDAQ:BRCM), which was added to Brookside’s equity portfolio during the third quarter of last year and whose stock surged by over 30% over the last 52-weeks.

Another fund holding shares of PTC Therapeutics, Inc. (NASDAQ:PTCT) is Sectoral Asset Management, led by Jerome Pfund and Michael Sjostrom. Sectoral owns some 1.55 million shares of the company as of the end of June, up by 64% on the quarter. Israel Englander‘s Millennium Management initiated a position in the company during the April-June period and owns around 446,900 shares.

A couple of days ago, the president of PTC Therapeutics, Inc. (NASDAQ:PTCT), Claudia De Oliveira Ribeiro Hirawat, converted her stock options and purchased 49,500 shares at $10.85 apiece and sold some 45,300 shares at around $36.00 per unit. She still owns around 38,500 shares after the sale. The only investor that bought shares in the open market this year is Michael Schmertzler, who purchased 23,000 shares at $24.50 apiece in February and currently owns 1.32 million shares. Last year he bought another 533,000 shares at $15.00 per unit during the IPO. With the stock currently trading at over $37, investors have gained some significant profits from holding the stock.

The stock of the company surged despite the company reported a significant decline in its revenue and net income for the second quarter. Nevertheless, PTC Therapeutics, Inc. (NASDAQ:PTCT) has done some progress in the development of its ataluren product designed for the treatment of patients with genetic disorders.

Generally-speaking, healthcare stocks represent great investment opportunities if the research is done properly. Brookside Capital seems like has some level of expertise in this area, since its other bets on the sector have had positive returns. For example, Medivation Inc (NASDAQ:MDVN), of which Brookside owns 1.59 million shares (up by 13% during the second quarter), surged by more than 74% over the last year. Since following the moves of big hedge funds like Brookside can provide some insights to retail investors, following the fund’s bullish move on PTC Therapeutics, Inc. (NASDAQ:PTCT) is particularly interesting.

Disclosure: none