Venrock’s VHCP Management’s Top Picks For 2016

At Insider Monkey, we look at the weighted average returns of the long positions a fund indicates in its 13F filings, in companies with a market cap greater than $1 billion, to estimate the returns of the fund’s stock picks in notable stocks. According to our results, hedge funds that focus exclusively on healthcare stocks or which have a major exposure to this industry have fared the best in 2015. For example, Julian Baker And Felix Baker‘s fund Baker Bros. Advisors has generated a positive return of 67.8% in 2015, while the results for Peter Kolchinsky‘s RA Capital Management show a return of 34.5%. In this article we’ll take a look at another fund that focuses on healthcare stocks – Venrock Healthcare Capital Partners (VHCP). Founded in 2009, VHCP Management is a subsidiary of Venrock Associates, a venture capital firm. The fund is run by Anders Hove and Bong Koh, and invests exclusively in healthcare companies, both public and private. According to its latest 13F filing, the fund’s equity portfolio carried a market value of $165 million and contained 21 positions.

An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we analyze the 13F filings of several hundred high-performing hedge funds and use the data to see what stocks they are collectively bullish on. Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas (see more details here).

Anders Hove and Bong Koh have decided to lock in some profits on their investment in Coherus Biosciences Inc (NASDAQ:CHRS) during the fourth quarter. According to its 13F filing, VHCP Management’s holding was reduced by 30% to 611,010 shares valued at a little over $14 million. Although 2015 was a roller-coaster year for Coherus Biosciences Inc (NASDAQ:CHRS) stock, it still ended the year up by 39%. Since then, however, the stock has fallen off the cliff, currently down by 38% year-to-date.

Anacor Pharmaceuticals Inc (NASDAQ:ANAC) is another stock Hove and Koh have decided to cash in on, having dumped 89% of their position during the quarter. As a result, VHCP Management now holds 140,756 shares worth approximately $15.9 million. Anacor Pharmaceuticals Inc (NASDAQ:ANAC) is set to release 2015 fourth quarter financial report on February 29, with analysts expecting revenues of $27.9 million and a loss of $0.30 per share. Anacor Pharmaceuticals Inc (NASDAQ:ANAC) has also been crushed amid the recent market sell-off and has slid by 40% since the start of the year. This is not such a big deal, considering that the stock ended 2015 up by 252%.

VHCP Management’s holding in GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) was unchanged over the fourth quarter, with the fund having reported ownership of 311,853 shares valued at $21.6 million in its latest 13F filing. The same position was worth $28.5 million at the end of the third quarter. GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) has found itself in hot water recently, being accused of providing investors with misleading financial and business information. In its latest Annual Report, the company said its management “does not have sufficiently precise controls to evaluate the completeness and accuracy of the calculation of clinical trial accruals due to the incorrect allocation of expenditure to clinical studies.” Several law firms have filed lawsuits against the company on behalf of shareholders.

Anders Hove and Bong Koh decided not alter their investment in Heron Therapeutics Inc (NASDAQ:HRTX) during the last three months of 2015 and VHCP Management holds 1.09 million shares worth $29.2 million. Heron Therapeutics Inc (NASDAQ:HRTX) reported fourth quarter earnings earlier this month and missed Wall Street’s expectations. The company posted a loss of $0.87 per share, worse than analysts’ forecasts of a loss of $0.64 per share. For the whole Heron Therapeutics Inc (NASDAQ:HRTX)’s loss widened to $97.6 million or $2.95 a share. The stock is currently trading around the $18 level, down by 30% since the beginning of 2016.

DBV TECHNOLOGIES (OTCMKTS:DBVTF) is Hove and Koh’s new top dog, despite the fund having decreased its position by 34% over the quarter. In its latest 13F filing, VHCP Management has indicated ownership of 463,643 shares valued at $32.5 million. DBV TECHNOLOGIES (OTCMKTS:DBVTF) is a biotech company that focuses on treatments for severe allergies. Its portfolio comprises several products under the Viaskin® brand currently undergoing trials in various stages of development. DBV TECHNOLOGIES (OTCMKTS:DBVTF) is set to release its next earnings report on March 23 and analysts are expecting a loss of $0.53 per share.

Disclosure: none