Biotech Guru Joseph Edelman‘s Perceptive Advisors is known for its long-short investment approach that focuses on biotech stocks. Edelman founded the fund in 1999 and performed exceptionally well in its first year, returning 129%. Over the years that the fund has been in operation, it has registered more gains than losses. In its 13F filing for the first quarter of 2015, Perceptive showed that it had an equity portfolio of $1.29 billion. Being one of the funds that we track, and being focused on the biotech sector, we took a keen interest in its top healthcare picks at the end of March, which include Amicus Therapeutics, Inc. (NASDAQ:FOLD), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), and Retrophin Inc (NASDAQ:RTRX).
An everyday investor does not have the time or the required skillset to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Perceptive Advisors can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests, whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 84 percentage points and returning over 144%, while hedge funds themselves have collectively underperformed the market (read the details here).
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Amicus Therapeutics, Inc. (NASDAQ:FOLD), a public biopharmaceutical company headquartered in Cranbury, New Jersey, came atop the list of Joseph Edelman’s healthcare picks heading into the second quarter of 2015. According to Perceptive Advisors’ 13F filing, it holds a total of 14.44 million shares valued at $157.10 million, representing 12.2% of its equity portfolio. During the quarter, the fund didn’t have much activity on the stock in terms of shares increase or reduction.
Amicus Therapeutics, Inc. (NASDAQ:FOLD)’s stock gained around 370% over the last 52 weeks. Recently, the company has filed a Marketing Authorization Application for its Fabry monotherapy Galafold to be accorded full approval in the European Union. This is besides its efforts to submit a New Drug Application (NDA) for the same drug by the end of 2015. The $1.53 billion market cap company has recently witnessed an insider transaction in which Castelli Jeff, Officer (SVP, Program Management) unloaded 7,377 shares for $104,532, translating to an average price of $14.17. In its latest financial results for the first quarter, the company posted a net loss of $0.25 per share, missing the expected loss of $0.21. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is expected to have a loss of $1.08 per share for the current year. Some other funds that were invested in the company at the end of March were Jeremy Green‘s Redmile Group, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management and billionaire Israel Englander’s Millennium Management.
The second top pick of Perceptive Advisors was Neurocrine Biosciences, Inc. (NASDAQ:NBIX) in which the fund held a total of 3.74 million shares valued at $148.57 million at the end of the first quarter, up from 3.57 million shares at the end of the previous quarter. Last year, the company received Breakthrough Therapy Designation for NBI-98854, its vesicular monoamine transporter 2 inhibitor, meant for the treatment of tardive dyskinesia. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has recently appointed Eric Benevich as the Chief Commercial Officer to help in the commercialization of the drug, which is approaching its NDA filing. Benevich brings with him rich pharmaceutical commercial background, having served as the Vice President of Avanir Pharmaceuticals. Wall Street analysts expect the company to post a loss of $0.29 per share for the current quarter. For the first quarter, Neurocrine had a loss of $0.01 per share, compared to a loss of $0.18 a year earlier. The biopharmaceutical company based in San Diego, California, did not only attract the attention of Perceptive Advisors, but also several other funds that also increased their stakes. James A. Silverman‘s Opaleye Management raised its position to 145,000 shares from from 45,000 during the first quarter, while Zach Schreiber’s Point State Capital increased its exposure to 2.63 million shares from 750,000 shares.
In Retrophin Inc (NASDAQ:RTRX) Perceptive held a total of 2.78 million shares valued at $66.73 million at the end of March, up by 44% on the quarter. The company has recently announced a deal to sell its Rare Pediatric Disease Priority Review Voucher (“Pediatric PRV”) to Sanofi (NYSE:SNY) for a cash amount of $245 million. The voucher is awarded by the U.S. Food and Drug Administration (FDA) to encourage the development of new drugs. The company’s performance in the last quarter beat analysts’ consensus estimate, managing a loss per share of $0.04 compared to a loss of $0.50 per share that was expected by the analysts. Forward looking, analysts expect Retrophin Inc (NASDAQ:RTRX) to post a loss per share of $0.64 for the current quarter. The stock currently has an average ‘Buy’ rating, although Zacks has, however, downgraded the stock to “sell” recently. At the end of March, a total of 20 hedge funds held long positions in the stock with an aggregate investment value of $358.37 million. Mitchell Blutt‘s Consonance Capital Management and Kevin Kotler’s Broadfin Capital were among the funds that held stakes in the stock at the end of the period.
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