Samuel Islay‘s Orbimed Advisors has revealed its equity portfolio as of end of 2014, in a recent filing with the Securities and Exchange Commission. The top new picks of the fund included: Sientra Inc (NASDAQ:SIEN), TESARO Inc (NASDAQ:TSRO), Clovis Oncology Inc (NASDAQ:CLVS). All these health care companies are small-caps, and from an investor’s point of view the importance of these cannot be stressed enough. According to our research, blindly replicating the most popular hedge fund picks is of much less value to an investor, than following the small cap picks of these investment firms. Analyzing data between 1999 and 2009, we have concluded that hedge funds only beat the beat the market by 2.0 percentage points on an annual basis, while returns from their small cap picks during the same period were in double digits.
Orbimed Advisors’ main focus is the healthcare industry as nearly 96% of the fund’s holdings are in this sector. Samuel Islay formed a team of 80 professionals who are experts in the life sciences industry, medicine, finance and law. Market value of the Orbimed’s portfolio stood at $10.46 billion at the end of the fourth quarter, compared with $9.57 billion a quarter earlier. Besides the three new positions that we will discuss here, the fund initiated holdings in 50 other companies and increased their stake in 53 previously held stocks, according to the recent 13F filing. The portfolio itself is well diversified with top 10 positions comprising just 36.27% of the total value.
Islay disclosed 3.19 million shares of Sientra Inc (NASDAQ:SIEN) valued at $53.48 million to put it at the top of the list of new holdings. Since its IPO in October last year, Sientra is up by about 18.1%. The $290.86 million producer of silicon gel breast implants has a portfolio of 120 different varieties. According to the company, the market for their products stood at $600 million in 2013. Major competitors include Mentor (a division of Johnson & Johnson (NYSE:JNJ)) and Allergan, Inc. (NYSE:AGN). Among the 737 hedge funds that we track at Insider Monkey, Jacob Gottlieb‘s Vissum Asset Management purchased 1.48 million shares valued at $273.86 million during the fourth quarter. Sientra Inc (NASDAQ:SIEN)’s third quarter financial results included revenues of $10.67 million, which were 33.7% higher than same quarter last year, and a net loss per share of $6.94.
Next in line is TESARO Inc (NASDAQ:TSRO) with Islay adding 1.33 million shares valued at $49.46 million to Orbimed’s portfolio. The stock is up 83% over the last 52 weeks. Although the therapeutic drugs sector has generally performed well during this period, Tesaro’s returns of some 80% in the last 52 weeks are over 30 percentage points above the industry’s annual return. In recently reported fourth-quarter financial results TESARO Inc (NASDAQ:TSRO)’s net loss per share of $1.33 missed the $0.30 estimate. The oncology-focused biopharmaceutical company also raised nearly $180 million in a recent equity offering.
Our data shows that despite a loss in popularity among hedge funds over the fourth quarter, as the number of firms decreased to 16 from 20 a quarter earlier, the aggregate amount of capital that hedge funds had invested in TESARO Inc (NASDAQ:TSRO) increased to $961.1 million from $428.45 million. Among these funds, Hal Mintz’s Sabby Capital increased its stake by 5.97 million shares to 6 million shares valued at $747.75 million during the fourth quarter.
The last company on our list, Clovis Oncology Inc (NASDAQ:CLVS) is also focused in finding cancer treatments. Orbimed added some 714,100 shares of the healthcare company valued at $39.99 million. The $2.7 billion researcher of the much anticipated CO-1686 (rociletinib) drug forms 0.38% of Orbimed’s portfolio value. In November last year, Clovis Oncology Inc (NASDAQ:CLVS) announced its partnership with GlaxoSmithKline plc (ADR) (NYSE:GSK) in a clinical trial collaboration to study if CO-1686 can cure lung cancer patients when combined GSK’s Mekinist, which was approved last year. The company’s stock is up nearly 47.6% since then.
William Leland Edwards’ Palo Alto Investors and Christopher Medlock James’ Partner Fund Management increased their stakes by 23% and 36% to 2.1 million shares and 1.72 million shares respectively during the fourth quarter.
Disclosure: none
