Kahn Brothers is a New York-based hedge fund which was founded by famous American businessman Irving Kahn (who recently passed away at the age of 109 as the Oldest Money Manager) in 1978. The fund currently manages a public equity portfolio worth $552.18 million as of September 30. Kahn Brothers recently reported its third quarter holdings in a 13F filing with the SEC.
In this article, we’ll take a look at the fund’s top picks from the healthcare sector, in which it was more heavily invested than any other sector. Healthcare has been one of the worst performing sectors in 2016, thanks to the US presidential election campaign, during which candidates have promised to slash drug prices after coming to the Oval Office. Hillary Clinton and Bernie Sanders openly criticized pharmaceutical companies on their high prices, and pledged to change the way the industry works. These statements took a toll on healthcare stocks, which are down by 8.4% for the year on average, while about 20% of the total market value of the world’s biggest healthcare companies has been wiped out. However, as the political uncertainly abates, analysts think the healthcare sector is poised to grow, so let’s see what Kahn Brothers thought about names in the sector heading into the fourth-quarter.
Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details).
Novartis AG (ADR) (NYSE:NVS)
– Shares Owned by Kahn Brothers (as of September 30): 27,643
– Value of Kahn Brothers’ Holding (as of September 30): $2.18 million
Kahn Brothers reported ownership of 27,643 Novartis AG (ADR) (NYSE:NVS) shares as of September 30. The Swiss medical company reported third quarter EPS of $1.23 on $12.13 billion in revenue, versus the consensus estimates of $1.19 in EPS and $12.24 billion in revenue. The stock is down by over 17% year-to-date. Last week, the FDA gave fast-track review status to Novartis’ breast cancer drug Ribociclib. If approved, Novartis’ drug could take on Pfizer (NYSE:PFE)’s breast cancer drug Ibrance in the future. A total of 22 hedge funds tracked by Insider Monkey were bullish on Novartis AG (ADR) (NYSE:NVS) at the end of the second quarter.
Follow Novartis A G (NYSE:NVS)
Follow Novartis A G (NYSE:NVS)
GlaxoSmithKline plc (ADR) (NYSE:GSK)
– Shares Owned by Kahn Brothers (as of September 30): 632,040
– Value of Kahn Brothers’ Holding (as of September 30): $27.36 million
Kahn Brothers increased its holding in GlaxoSmithKline plc (ADR) (NYSE:GSK) by a whopping 66% in the third quarter, adding 251,705 shares of the company to its portfolio. The total value of the enhanced position stood at $27.36 million on September 30. The stock, which is currently under pressure amid a strong sterling pound, is down by 2.37% year-to-date. In the third quarter, GlaxoSmithKline’s sales jumped by 23% to $9.31 billion. At the end of the third quarter, Ken Fisher’s Fisher Asset Management held 11.86 million shares of GlaxoSmithKline plc (ADR) (NYSE:GSK).
Follow Glaxosmithkline Plc (NYSE:GSK)
Follow Glaxosmithkline Plc (NYSE:GSK)
On the next page, we’ll discuss some other healthcare stocks which held the attention of Kahn Brothers in the third quarter.
