This Pharma Company is Soaring After Steve Cohen Boosts Stake, GrubHub Inc. (GRUB) Has a Bullish New Investor, Plus 2 Other Moves

Revered investor Warren Buffett somewhat criticized the hedge fund industry during his holding company Berkshire Hathaway’s annual meeting that took place on Saturday, saying that “there’s been far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities”. The billionaire investor said that the cost of consulting and management, along with commissions, are consuming the returns of high net-worth individuals, endowment funds and public pensions that use hedge fund vehicles. Insider Monkey has advocated the same argument as for why the hedge fund industry has underperformed benchmarks in recent years, but we do try to squeeze the juice from the hedge fund industry by tracking their high-potential ideas. For that reason, the following article will examine four filings submitted to the SEC by several prominent hedge funds tracked by Insider Monkey.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Steve Cohen’s Successful Family Office Increases Stake in This Pharmaceutical Company

According to a new Schedule 13G filing, Steve Cohen’s Point72 Asset Management L.P. currently owns 3.72 million shares of Pernix Therapeutics Holdings Inc. (NASDAQ:PTX), which constitute 5.8% of the company’s outstanding common stock. This represents an increase from the stake of 1.05 million shares revealed in Point72’s 13F filing for the final quarter of 2015. The shares of the specialty pharmaceutical company have gained more than 38% in today’s trading session even though there is seemingly no company-specific news spurring the surge, save for Mr. Cohen’s filing.

Pernix Therapeutics Holdings Inc. (NASDAQ:PTX) primarily focuses on central nervous system (CNS) indications, which include neurology, pain, and psychiatry, as well as other specialty therapeutic areas. The company’s net product sales increased to $171.26 million in 2015 from $118.01 million in 2014 and $77.53 million in 2013. The massive increase in net product sales in the past two years has been driven by higher sales of Treximet, the only fixed dose combination product indicated for acute migraines. Treximet sales increased by $47.00 million, or nearly 85%, during 2015 to $101.75 million. The specialty pharmaceutical company will release its first quarter earnings report on May 5, which may enable the company to close down a portion of its stock’s 64% year-to-date loss, despite today’s big gains. Kevin Kotler’s Broadfin Capital was the owner of 6.09 million shares of Pernix Therapeutics Holdings Inc. (NASDAQ:PTX) at the end of December.

The next two pages of this article will discuss three separate SEC filings submitted by Adage Capital Partners and two other hedge fund vehicles.

Steadfast Capital Acquires New Stake in Leading Online Food Delivery Company

In a separate 13G filing, Steadfast Capital Management LP, overseen by Robert S. Pitts Jr., reported a new stake of 4.31 million shares in GrubHub Inc. (NYSE:GRUB), which accounts for 5.1% of the company’s outstanding shares. GrubHub is the leading online and mobile food delivery company, whose two restaurant-ordering platforms, GrubHub and Seamless, account for approximately 32% of all online food orders. Nonetheless, the competition in the online food delivery space has been intensifying in recent years. DoorDash, a three-year-old food delivery service, recently raised $127 million in venture capital (VC) from some of Silicon Valley’s largest VC firms such as Sequoia Capital, Khosla Ventures, and others. DoorDash has spread its operations out across 22 markets from a mere three markets less than a year ago. Similarly, Uber, the so-called killer of the taxi industry, recently launched a food delivery app called UberEats.

Meanwhile, GrubHub Inc. (NYSE:GRUB)’s 2015 revenue was $361.83 million, up from $253.87 million in 2014 and $137.14 million in 2013. The company generally receives a commission from restaurants, which represents a share of the value of the orders processed through its platform. GrubHub shares have gained 10% since the beginning of 2016, but are down by 31% in the past 52 weeks. Ross Turner’s Pelham Capital acquired a 4.40 million-share stake in GrubHub Inc. (NYSE:GRUB) during the December quarter.

Adage Capital Partners Discloses 4.8% Stake in Independence Contract Drilling

As revealed by a 13G filing, Adage Capital Partners L.P., founded by Phillip Gross and Robert Atchinson, currently owns 1.82 million shares of Independence Contract Drilling Inc. (NYSE:ICD), which make up 4.84% of the company’s outstanding common stock. The current position is more than double the stake of 848,201 shares reported in Adage Capital’s 13F filing for the fourth quarter of 2015. Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers targeting unconventional resource plays across the United States. Precisely, the company constructs and operates a premium land rig fleet that comprises 14 technologically-advanced, custom-designed ShaleDriller rigs.

The depressed crude oil prices throughout the entirety of 2015 and early 2016 have put pressure on ICD’s pricing, utilization and contract tenors for its ShaleDriller rig. Independence Contract Drilling Inc. (NYSE:ICD)’s drilling fleet had a utilization rate of 86% during the first quarter of 2016, but the rate is anticipated to decline should crude oil prices fail to continue their recovery. At the end of April, the company raised approximately $43.0 million through an underwritten public offering of 13.23 million shares of common stock, which were sold to the public at a price of $3.50 per share. ICD plans to use the capital to pay down a portion of the outstanding borrowings under its revolving credit facility, as well as to cover general corporate expenses. Jim Simons’ Renaissance Technologies owned 73,900 shares of Independence Contract Drilling Inc. (NYSE:ICD) on December 31.

Cyrus Capital Partners Reveals 29.1% Stake in Sphere 3D

According to a newly-amended 13D filing, Stephen C. Freidheim’s Cyrus Capital Partners L.P. has ownership of 16.21 million shares of Sphere 3D Corp. (NASDAQ:ANY), which represent 29.1% of the company’s common stock. The stake includes 8.17 million shares issuable upon conversion of $24.50 million in principal amount of convertible debentures and 1.44 million shares issuable upon the exercise of various types of warrants. Cyrus Capital had ownership of 14.04 million shares in early January, as revealed by a 13D filing at that time, which included 6.50 million shares issuable upon conversion of $19.50 million in principal amount of convertible debentures and 935,975 shares issuable upon the exercise of warrants. Therefore, the fund’s actual ownership of common stock has not undergone any changes since early 2016.

The containerization, virtualization, and data management solutions provider has seen its market value drop by 23% since the beginning of 2016. Sphere 3D Corp. (NASDAQ:ANY)’s 2015 revenue was $76.2 million, a big increase from $13.5 million in 2014. The increase in the company’s top-line figure was mainly driven by the acquisition of Overland in December 2014, as well as the acquisition of Imation Corp. (NYSE:IMN)’s RDX product line in August 2015. George Hall’s Clinton Group had nearly 970,000 shares of Sphere 3D Corp. (NASDAQ:ANY) in its equity portfolio at the end of 2015.

Disclosure: None