Sivik Global Healthcare’s Top Biotech Stock Picks For Q4

Sivik Global Healthcare is a Greenwich, Connecticut-based healthcare-focused hedge fund founded by Krishen Sud in 2006. In 2011, the fund merged with Traxis Partners LP to benefit from operating synergies. Mr. Sud holds an MBA in Finance from the Wharton School at the University of Pennsylvania and has over two decades of experience as an investment manager. The fund has recently submitted its 13F filing with the SEC for the reporting quarter ended September 30. According to the filing, Sivik’s US equity portfolio at the end of Septmeber was worth $206.19 million, a significant decline from $288.18 million that it was worth at the end of June. The filing also revealed that as of September 30, 93% of Sivik’s US equity portfolio was invested in stocks from the healthcare sector. Since Sivik specializes in investing in the healthcare space, in this article we are going to analyze the fund’s top five biotech stock picks at the end of the third quarter.

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 49% gain for the S&P 500 Index (read more details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

#5 Regeneron Pharmaceuticals Inc (NASDAQ:REGN)

Shares Owned by Sivik Global Healthcare (as of September 30): 10,000 shares

Value of Holding (as of September 30): $4.651 Million

Let’s start with  pharmaceutical major Regeneron Pharmaceuticals Inc (NASDAQ:REGN) in which the fund initiated a stake during the third quarter itself by purchasing 10,000 shares. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has been one of the best performing big pharmaceutical stocks this year with year-to-date gains of 37% currently. On November 8, the company along with Sanofi SA (ADR) (NYSE:SNY) announced that the pivotal Phase 3 study of ‘Sarilumab’, an investigational, human antibody against the IL-6 receptor has met its co-primary endpoints of improvements in symptoms and signs of rheumatoid arthritis (RA) and improvements in physical function, and also its secondary efficacy endpoints. For the third quarter of fiscal 2015, Regeneron Pharmaceuticals reported EPS of $3.47 on revenue of $1.14 billion, compared to analysts’ expectation of EPS of $2.62 on revenue of $1.05 billion. Jerome Pfund and Michael Sjostrom‘s Sectoral Asset Management had also initiated a stake in the company during the second quarter by purchasing 174,900 shares.

#4 Gilead Sciences, Inc. (NASDAQ:GILD)

Shares Owned by Sivik Global Healthcare (as of September 30): 55,000 shares

Value of Holding (as of September 30): $5.40 Million

Sivik Global Healthcare made use of the 15.8% correction that shares of Gilead Sciences, Inc. (NASDAQ:GILD) experienced during the third quarter by adding an additional 39% or 15,500 shares of the company during that period. Even after suffering such a noteworthy decline, the stock of the company made an impressive recovering during October and currently trades up nearly 15% year-to-date. On Novemeber 6, Gilead Sciences, Inc. (NASDAQ:GILD)’s drug ‘Genvoya’, which is the world’s first TAF-based single-tablet HIV-1 treatment regimen, won approval from the Food and Drug Administration. Experts believe that this approval is a big win for the company because Genvoya has the potential to generate multi-billion dollar in sales for Gilead Sciences in the future. The company declared better than expected fiscal 2015 third quarter results on October 27, reporting EPS of $3.22 on revenue of $8.30 billion. Analysts had expected it to report EPS of $2.87 on revenue of $7.84 billion. John Armitage‘s Egerton Capital Limited more than quadrupled its stake in Gilead Sciences during the second quarter to nearly 4 million shares.

#3 Celgene Corporation (NASDAQ:CELG)

Shares Owned by Sivik Global Healthcare (as of September 30): 50,000 shares

Value of Holding (as of September 30): $5.409 Million

Moving on, during the third quarter Sivik Global Healthcare increased its stake in Celgene Corporation (NASDAQ:CELG) by 25% or 10,300 shares. Shares of the company have dropped by 8.2% in the last two trading sessions alone after it reported its fiscal 2015 third quarter results and currently is trading with meager year-to-date gains of 4.86%. Although the EPS of $1.23 on revenue of $2.33 billion that the company reported for the quarter was better than the EPS of $0.97 on revenue of $1.96 billion that it had reported for the same quarter last year, it wasn’t in-tune with the EPS of $1.22 on revenue of $2.40 billion that analysts had expected. Following the earnings release, On November 6, analysts at Canaccord Genuity reiterated their ‘Buy’ rating on the stock, but lowered their price target on it to $156 from $190. Cliff Asness‘ AQR Capital Management had increased its stake in Celgene Corporation (NASDAQ:CELG) by 21% or over 1.5 million shares during the April-June period.

#2 Amgen, Inc. (NASDAQ:AMGN)

Shares Owned by Sivik Global Healthcare (as of September 30): 40,000 shares

Value of Holding (as of September 30): $5.533 Million

Although shares of Amgen, Inc. (NASDAQ:AMGN) have remained flat for most part of 2015, it seems Sivik Global Healthcare believes that it is ready for a bull run and that’s why initiated a stake in the company during the third quarter. On November 8, Amgen, Inc. (NASDAQ:AMGN) and Cytokinetics, Inc. (NASDAQ:CYTK) announced favorable data from the  Phase 2 trial of the expansion phase of COSMIC-HF (Chronic Oral Study of Myosin Activation to Increase Contractility in Heart Failure). The company came out with better than expected fiscal 2015 third quarter earnings on October 28. While analysts had expected it to report EPS of $2.38 on revenue of $5.32 billion for the quarter, the company declared EPS of $2.72 on revenue of $5.72 billion. With an ownership of 9 million shares Billionaire Dan Loeb‘s Third Point was the largest shareholder of the company at the end of June among the funds we cover.

#1 Biogen Inc (NASDAQ:BIIB)

Shares Owned by Sivik Global Healthcare (as of September 30): 20,000 shares

Value of Holding (as of September 30): $5.836 Million

Finally, even though its stock suffered a massive 27.75% decline during the third quarter and Sivik Global Healthcare sold 4,800 shares of the company during the same period, Biogen Inc (NASDAQ:BIIB) remained the fund’s top biotech pick at the end of the third quarter. On October 21, the same day that the company released its fiscal 2015 third quarter results, it also announced that it would be laying off 880 of its employees, including 440 in its home state of Massachusetts. For the third quarter ending September 30, the company reported EPS of $4.48 on revenue of $2.39 billion versus analysts’ expectation of EPS of $3.80 on revenue of $2.65 billion. On November 5, analysts at Piper Jaffray upgraded the stock to ‘Overweight’ from ‘Neutral’. Andreas Halvorsen‘s Viking Global had initiated a stake in Biogen Inc during the second quarter by acquiring 513,444 shares of the company.

Disclosure: None