Under-the-Radar Hedge Fund Focusing on Pharmacyclics, Inc. (PCYC), Novadaq Technologies Inc. (NVDQ)

…on the downside, Insulet is priced at a premium to the rest of the medical-device industry and more established competitors in the diabetes devices market will continue to offer strong competition.

Fifth in this hedgie’s top five is Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA).  The cancer-drug maker recently endured a steep drop in mid-December following the announcement that the FDA approved the drug Iclusig for the treatment of bone marrow and a rare blood cancer.  So why did Ariad shares fall on good news? Most was likely on profit taking regarding recent gains prior to the announcement, but also because before Ariad can begin to return a profit on the drug, it will likely take 8-10 years. And with the stock currently priced 6x over the industry average, the stock is very expensive to competitors.  Dafna reduced its holdings in Ariad by 11% last quarter.

Dafna Capital Management proves that you don’t have to be a Wall Street trader or stock guru to manage a very profitable fund. Dr. Fischel is obviously a follower of the adage “stick with what you know” and it has paid off very handsomely.

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