Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Teva Pharmaceutical Industries Ltd (ADR) (TEVA) Is One of 5 Key Stocks in This Healthcare-Focused Hedgie’s Portfolio

Healthcare stocks aren’t for everyone, but one way average investors can learn more about this space is by paying attention to those who make a career out of it. Kevin Kotler’s Broadfin Capital is entirely invested in healthcare stocks, and represents a good piggybacking candidate, so to speak. Interestingly, his top five positions make up roughly one-third of his $404 million equity portfolio, according to his latest 13F filing with the SEC.

Kevin Kotler

Not everyone loves the hedgies, but we’re convinced that the average investor should, as our small-cap strategy beat the market by 18 percentage points a year. Let’s have a look at Mr. Kotler’s favorite stocks.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is Broadfin Capital’s top equity holding. Kotler devotes 8.78% of his fund’s capital to the stock. The developer and marketer of generic drugs is currently yielding a 2.66% dividend, and its stock price is up 9.02% thus far this year. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s stock presently has an 8.03% ROE, compared to an industry average near the 7.5% mark. Likewise, the vertically integrated pharmaceutical producer’s ROI metric (5.29%) is on par with the peer norms (5.91%).

Recently, the company announced that one of their multiple sclerosis drugs dramatically reduced disease progression, according to results from a stage III trial. While this news may be most relevant to sufferers of the degenerative disease, it is surely a boon to investors, as well.

The second-largest holding in Kotler’s portfolio, Alkermes Plc (NASDAQ:ALKS), comprises 7.61% of the fund’s portfolio. The company, which develops, manufactures and markets medicines for the treatment of prevalent chronic diseases, recently announced the expansion of corporate operations to Ireland and the formation of a headquarters in Dublin.

The drug delivery company’s subpar ROI and ROE figures may deter some investors, but a projected 43% annual EPS growth over the next half-decade, and a 40% increase in stock price over the past year are enough to merit consideration. Indeed, the stock is up more than 230% since the 2008 market bottom. Additionally, a low long-term debt-to-equity value (0.39) should also be attractive to investors.

Making up 7.43% of the fund, Natus Medical Inc (NASDAQ:BABY) is Broadfin’s third-largest equity position. The company, which provides devices and equipment for screening, monitoring, and treatment of common ailments in newborns, has seen a 57.24% growth in sales over the past year. Additionally, the stock price is up more than 25% over the same time frame. A projected 10.84% EPS growth next year is clearly attractive to Mr. Kotler, who recently increased his position in the stock by 60%. Israel Englander and Jim Simons are a couple peer hedge funds who are also bullish on Natus, see the full list of the smart money’s interest here.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.