In this article, we discuss the top 10 stock picks of Henrik Rhenman’s Rhenman Partners.
Founded by American biochemist and billionaire Henrik Rhenman in 2008, Rhenman & Partners Asset Management is a Stockholm-based asset manager focusing on managing the portfolio of a niche fund registered in Luxembourg named Rhenman Healthcare Equity L/S (RHE L/S), launched in 2009.
Rhenman Healthcare Equity L/S (RHE L/S) is a long-biased global hedge fund focused on the healthcare sector. Since its inception in June 2009, RHE L/S has returned 668%, corresponding to an annual average of 17%. Rhenman Healthcare Equity L/S (RHE L/S) is led by an experienced management team, which the Scientific Advisory Board assists.
Many prestigious and notable awards have been bestowed to Rhenman & Partners Asset Management. Rhenman & Partners Asset Management was named the winner in the “Alternative Long/Short Equity Global” over three years category at the Refinitiv Lipper Fund Awards Nordics this year. Additionally, European institutional investors, high net worth people, investment consultants, fund managers, and prime brokers selected Rhenman Healthcare Equity L/S as the winner of the “Best Global Equity Hedge Fund” category of the 2021 Hedgeweek Awards.
As of the first quarter of 2022, Rhenman & Partners Asset Management invests primarily in the health sector industry. Some of the most notable stocks in the Q1 portfolio of Rhenman & Partners Asset Management include Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and Horizon Therapeutics Public Limited Company (NASDAQ:HZNP).
Our Methodology
We used the Q1 2022 portfolio of Henrik Rhenman’s Rhenman Partners for this analysis, selecting the top 10 holdings of the hedge fund.
10. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Rhenman Partners’ Stake Value: $23,357,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.3%
Number of Hedge Fund Holders: 49
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company that develops and commercializes therapies for cystic fibrosis. The company sells SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO to people with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene, as well as TRIKAFTA to people with CF who are six years old or older and have at least one F508del mutation. Piper Sandler analyst Do Kim on July 26 raised the firm’s price target on Vertex Pharmaceuticals Incorporated from $242 to $256 and maintained a Neutral rating on the stock.
According to Insider Monkey’s data, 49 hedge funds were bullish on Vertex Pharmaceuticals Incorporated at the end of Q1 2022, with combined stakes worth $2.2 billion. Ian Simm’s Impax Asset Management is the current leading position holder in the company, with 860,672 shares worth about $224.6 million.
In addition to Pfizer Inc., Eli Lilly and Company, and Horizon Therapeutics Public Limited Company, elite hedge funds are pouring into Vertex Pharmaceuticals Incorporated.
Here is what Tweedy Browne Company has to say about Vertex Pharmaceuticals Incorporated in its Q4 2021 investor letter:
“Portfolio activity during the quarter was relatively modest and mainly on the sell side, taking advantage of the market’s advance to trim or sell positions that were trading at or above our estimates of their underlying intrinsic values. In terms of newly established positions, there were only two, (including) Vertex Pharmaceutical, a US-based pharma company specializing in therapies for cystic fibrosis (Value Fund). Both of these companies at purchase were trading at substantial discounts from our estimates of their underlying intrinsic values, and, in our view, are financially strong and well positioned for future growth.
Vertex Pharmaceutical, which was purchased by the Tweedy, Browne Value Fund in mid-November 2021, is a biotechnology company that specializes in rare diseases/orphan drugs. The company’s current strength is in the treatment of cystic fibrosis, where its therapies are the gold standard of care globally. Analysts expect that Vertex will be able to maintain its dominant position in the treatment of this disease, which afflicts 83,000 people worldwide, largely due to the effectiveness of its therapies, the fact that patent expirations for its drugs are a long way off into the future (2030-2037), and the lack of effective competition. This affords Vertex pricing power for its drugs, as there are currently no good alternative therapies. Assuming the company receives complete international and pediatric approvals, Vertex’s portfolio of approved drugs would be eligible to treat 90% of the people who have this disease. Vertex’s therapies are also not one and done drugs, but rather start in early childhood and continue throughout the patient’s lifetime. The company’s strong cash flow, in our view, should support the company’s development of even better next generation drugs to treat cystic fibrosis as well as diversify its drug pipeline to treat other rare diseases. However, many of these treatments are on the horizon or are in their incipient stages of development.
In the quarter just prior to the Fund’s initial purchase of Vertex, knowledgeable insiders, including the company’s CEO and its lead independent director, purchased millions of dollars of the company’s stock at prices higher than we paid for the Fund’s shares. The company itself also repurchased approximately $642 million worth of its shares in the 3rd quarter at or around the same prices paid by the CEO and lead director ($195 per share). We estimate the company’s underlying intrinsic value to be in the range of $240 to $250 per share, and we believe that estimate is well supported by current, here-and-now cash flow, operating income and earnings per share. Morningstar and Goldman Sachs have valued the company at substantially higher prices than our estimate of $240 – $250 per share. The Fund’s weighted average cost in the stock is $187. At initial purchase, the company was trading at approximately 14 times current earnings, and 9.9 times enterprise value to earnings before interest and taxes.”
9. CVS Health Corporation (NYSE:CVS)
Rhenman Partners’ Stake Value: $23,784,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.34%
Number of Hedge Fund Holders: 72
CVS Health Corporation (NYSE:CVS) is a healthcare company based in the United States.
Citi analyst Daniel Grosslight on July 6 said he’s not surprised that 1Life Healthcare (NASDAQ:ONEM) has reportedly attracted takeover interest with press reports naming CVS Health Corporation as a top contender.
According to Insider Monkey’s data, 72 hedge funds were bullish on CVS Health Corporation at the end of Q1 2022, up from 71 funds in the earlier quarter. Ian Simm’s Impax Asset Management is the company’s leading shareholder, with 443,668 shares worth $44.9 million.
8. Cigna Corporation (NYSE:CI)
Rhenman Partners’ Stake Value: $26,836,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.64%
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. Rhenman Partners added Cigna Corporation to its portfolio in the first quarter of 2022 by purchasing 112,000 shares, worth $26.83 million.
On July 14, Truist analyst David MacDonald raised the firm’s price target on Cigna Corporation to $330 from $310 and kept a Buy rating on the shares.
Among the hedge funds tracked by Insider Monkey, 63 funds reported long positions in Cigna Corporation at the end of Q1 2022, up from 53 funds in the preceding quarter. Richard Pzena’s Pzena Investment Management currently holds the most significant stake in the company, with 427,875 shares worth $112.7 million.
Here is what Davis Opportunity Fund has to say about Cigna Corporation in its Q4 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services, and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
7. Pfizer Inc. (NYSE:PFE)
Rhenman Partners’ Stake Value: $27,050,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.66%
Number of Hedge Fund Holders: 79
Pfizer Inc. develops, produces, sells, markets, and distributes biopharmaceutical products globally. It provides drugs and vaccines for various therapeutic conditions, including cardiovascular disease, metabolic disease, and women’s health, under the Premarin family and Eliquis brands. Rhenman Partners added Pfizer Inc. to its Q1 2022 portfolio by acquiring 522,500 shares worth $27.05 million.
According to Insider Monkey’s database, 79 hedge funds were bullish on Pfizer Inc. at the end of March 2022, with combined stakes worth $4.1 billion. Richard Pzena’s Pzena Investment Management holds the company’s largest stake, comprising more than 2.9 million shares worth $155.6 million.
6. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)
Rhenman Partners’ Stake Value: $28,328,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.79%
Number of Hedge Fund Holders: 38
Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is a biopharmaceutical company that identifies, develops, and commercializes pharmaceutical products for various unmet medical needs in the United States, Europe, and worldwide.
Rhenman Partners added Jazz Pharmaceuticals Plc to its portfolio in the first quarter of 2022 by purchasing 181,976 shares worth $28.3 million.
Piper Sandler analyst David Amsellem on June 3 reiterated an Overweight rating on Jazz Pharmaceuticals Plc with a $193 price target after surveying 25 physicians who manage a significant number of patients with narcolepsy and idiopathic hypersomnia. The analyst believes that the opportunity in hypersomnia will allow Jazz Pharmaceuticals Plc to drive a larger overall patient footprint for its oxybate franchise than it did when the market was Xyrem-only.
According to Insider Monkey’s data, 38 hedge funds were bullish on Jazz Pharmaceuticals Plc at the end of Q1 2022, up from 35 in the preceding quarter. Bhagwan Jay Rao’s Integral Health Asset Management holds the most prominent position in the company, with 20,874 shares worth $3.2 million.
Like Pfizer Inc., Eli Lilly and Company, and Horizon Therapeutics Public Limited Company, intelligent investors are piling into Jazz Pharmaceuticals Plc.
5. McKesson Corporation (NYSE:MCK)
Rhenman Partners’ Stake Value: $29,082,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.86%
Number of Hedge Fund Holders: 59
McKesson Corporation (NYSE:MCK) offers healthcare services in the United States and worldwide. It operates in four segments: the U.S. Pharmaceutical, Global, Medical-Surgical, and Prescription Technology Solutions (RxTS). The Pharmaceutical segment in the United States distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare-related products. Rhenman Partners added McKesson Corporation to its Q1 2022 portfolio by acquiring 95,000 shares worth $29.08 million, representing 2.86% of the total holdings.
On July 25, McKesson Corporation declared a $0.54 per share quarterly dividend, a 14.9% increase from its prior dividend of $0.47. The dividend is payable on October 3, to shareholders of record as of September 1.
4. UnitedHealth Group Inc. (NYSE:UNH)
Rhenman Partners’ Stake Value: $29,578,000
Percentage of Rhenman Partners’ 13F Portfolio: 2.91%
Number of Hedge Fund Holders: 103
UnitedHealth Group Inc. (NYSE:UNH) is a diversified US healthcare company. It operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and OptumRx. Rhenman Partners, as of Q1 2022, owns 58,000 shares of UnitedHealth Group Inc., worth $29.5 million, representing 2.91% of the total 13F holdings.
Argus analyst David Toung on July 25 raised the firm’s price target on UnitedHealth Group Inc. from $580 to $650 and maintained a Buy rating on the stock following its Q2 results and guidance increase.
3. AbbVie Inc. (NYSE:ABBV)
Rhenman Partners’ Stake Value: $31,611,000
Percentage of Rhenman Partners’ 13F Portfolio: 3.11%
Number of Hedge Fund Holders: 76
AbbVie Inc. (NYSE:ABBV) is a pharmaceutical company that discovers, develops, manufactures, and sells pharmaceuticals worldwide.
Securities filings for Q1 2022 reveal that Rhenman Partners added AbbVie Inc. to its portfolio by purchasing 195,000 shares worth $31.6 million, representing 3.11% of the total 13F holdings.
2. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP)
Rhenman Partners’ Stake Value: $35,333,000
Percentage of Rhenman Partners’ 13F Portfolio: 3.48%
Number of Hedge Fund Holders: 56
Horizon Therapeutics Public Limited Company, a biotechnology firm, is dedicated to the discovery, development, and commercialization of medicines that address the critical needs of people affected by rare, autoimmune, and severe inflammatory diseases. The company is divided into two divisions: Orphan and Inflammation. Its product portfolio includes 12 medicines for rare diseases, gout, ophthalmology, and inflammation. Rhenman Partners added Horizon Therapeutics Public Limited Company to its Q1 portfolio by buying 335,837 shares worth $35.33 million, representing 3.48% of the total holdings.
Here is what Carillon Tower Advisers has to say about Horizon Therapeutics Public Limited Company in their Q1 2021 investor letter:
“Horizon Therapeutics is a biopharmaceutical company whose primary focus is research, development, and marketing late-stage pharmaceutical products. After experiencing some unfortunate manufacturing hiccups in the later stages of 2020 for its key product, Tepezza, which is used in treating thyroid eye disease, the company recently received positive news that should relieve their supply issues going forward. With the manufacturing of Tepezza back online after being forced to halt due to Operation Warp Speed’s COVID-19 vaccine production orders, Horizon expects patient treatments to resume in mid-April.”
1. Eli Lilly and Company (NYSE:LLY)
Rhenman Partners’ Stake Value: $35,367 ,000
Percentage of Rhenman Partners’ 13F Portfolio: 3.48%
Number of Hedge Fund Holders: 53
Eli Lilly and Company discovers, develops, and sells human pharmaceuticals worldwide.
Rhenman Partners purchased 123,500 shares of Eli Lilly and Company in Q1 2022, worth $35.3 million, representing 3.48% of the total 13F portfolio.
Eli Lilly and Company was discussed in the Q1 2022 investor letter of Baron Funds. Here’s what the firm said:
“Eli Lilly and Company is a global pharmaceutical company with a diverse offering primarily focused on therapeutics. Performance was strong mostly due to consistent financial growth powered by its core diabetes (and future obesity) franchise, as well as the constant drumbeat surrounding the Alzheimer’s therapeutic market, of which Eli Lilly has one of the three potential winning blockbuster candidates in Donanemab. We retain conviction in Eli Lilly given the company’s strong long-term growth outlook.”
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This article is originally published at Insider Monkey.
