Jacob Gottlieb’s Visium Asset Management recently filed its latest 13F with the Securities and Exchange Commission for the reporting period of September 30. Visium was founded by Gottlieb about ten years ago and the fund today manages a public equity portfolio valued at $7.3 billion, which is primarily invested in healthcare stocks. Besides healthcare stocks, which accounted for 54% of the fund’s portfolio, it also holds notable stakes in technology and financial stocks. Given the turbulence in the healthcare sector during the third quarter, we turn to Visium’s top five picks, all of which are healthcare stocks, to shed some light on stocks that the industry veteran believes will make some noise coming out of the healthcare downturn.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
#5 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)
– Shares held (as of September 30): 1.03 million
– Total Value (as of September 30): $184.08 million
Visium added 200,525 more shares to its holding of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), the specialty pharmaceutical and medical device company based in Canada, which was at the center of the healthcare swoon during the third quarter. More recently, Valeant is considering the sale of its specialty contact lens manufacturing division, Paragon Vision Sciences, Reuters reported on Monday, citing two people familiar with the matter. The FTC has been investigating Valeant for potentially cornering a portion of the contact lens market. Shares of the company have lost 34.41% year-to-date and hedge funds lost some of their enthusiasm for the stock in the third quarter, as the total number of funds in our database that held stakes in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) dropped by ten quarter-over-quarter to 88. Among those still-optimistic investors is Bill Ackman’s Pershing Square, which held 19.47 million shares at the end of the third quarter.
#4 Allergan plc Ordinary Shares (NYSE:AGN)
– Shares held (as of September 30): 997,201
– Total Value (as of September 30): $271.05 million
Allergan PLC (NYSE:AGN) is a new position for Visium, initiated during the third quarter. Pfizer Inc. (NYSE:PFE) and Allergan last month announced an agreement under which Pfizer will combine with Allergan in a stock transaction currently valued at $363.63 per Allergan share, for a total enterprise value of about $160 billion. Allergan shareholders will receive 11.3 shares of the combined company for each Allergan share, while Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares. The combined company is expected to maintain Allergan’s Irish legal domicile, with global operational headquarters in New York. The transaction is likely to be completed in the second half of 2016. Allergan PLC (NYSE:AGN)’s shares have gained 20.61% year-to-date. Arthur B. Cohen and Joseph Healey‘s HealthCor Management held 475,000 Allergan shares worth $129.11 million at the end of September.
On the next page, we’ll cover the top three top stock picks of Visium.