Billionaire Steven Cohen Reveals Two New Stock Picks, While Roberto Mignone Boosts Chimerix Inc. (CMRX) Stake

The hedge fund industry as a whole did not perform particularly well in 2015, but there were a few investment vehicles that managed to greatly outperform the broader market. Steven Cohen’s family office Point72 Asset Management was one of those, as it gained almost 16% last year, while the S&P 500 Index closed the year in negative territory. Even though most hedge funds’ performance was not as fruitful as one might have anticipated during the less bullish market, it still pays off to track their moves and newest bets. For that reason, the following article will discuss three new 13G filings submitted with the SEC by billionaires Roberto Mignone and Steven Cohen. Two of the three 13Gs are filed by Cohen’s Point72, and may disclose two potential winners for 2016.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered 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 more details here).

According to a Schedule 13G filing, Roberto Mignone’s Bridger Management LLC currently owns 2.97 million shares of Chimerix Inc. (NASDAQ:CMRX), which account for 6.4% of the company’s outstanding common stock. The position represents a large increase from the 307,782-share position revealed through the fund’s 13F filing for the third quarter. At the end of December, the biopharmaceutical company announced that its Phase 3 SUPPRESS trial of brincidofovir failed to meet its primary endpoint for the prevention of clinically significant cytomegalovirus (CMV) infection in patients undergoing hematopoietic cell transplantation (HCT). Chimerix Inc. (NASDAQ:CMRX)’s shares are down by nearly 75% since the announcement and some analysts believe that the stock represents a “post-blow-up opportunity”. In spite of the recent failure, the company intends to continue the separate trials testing brincidofovir in serious adenovirus infections and smallpox. Just recently, Piper Jaffray reiterated its ‘Overweight’ rating on the stock and lifted its price target to $18 from $11, citing increased confidence in brincidofovir’s trials in adenovirus, smallpox, and other infections. It is also important to note that Chimerix’s current share price assigns the company a value that is below its current cash balance. The strong insider buying registered at the company recently also suggests confidence in brincidofovir’s future potential among the firm’s top executives.

The number of hedge funds from our system with positions in Chimerix dropped to 17 from 21 during the third quarter (before the company announced the failure of the SUPPRESS trial). Even so, those investment managers amassed nearly 12% of the company’s outstanding shares. Jeremy Green’s Redmile Group lifted its position in Chimerix Inc. (NASDAQ:CMRX) by 53% during the third quarter to 1.07 million shares.

Let’s head to the next two pages of this article, where we discuss the two filings submitted by successful money manager Steven Cohen.

In a Schedule 13G filing, Point72 Asset Management L.P. reported initiating a new stake of 3.95 million Class A shares of DSW Inc. (NYSE:DSW), which represents 5.0% of the company’s shares. So let’s attempt to stipulate what might have guided Cohen to go long DSW. The company mainly operates through two segments: the DSW segment and the Affiliated Business Group segment. The former segment provides a wide variety of dress, casual and athletic footwear and accessories, while the latter one supplies merchandise to three other retailers. The shares of the footwear retailer have lost 36% over the last year, presumably because of weak comparable store sales growth. DSW Inc. (NYSE:DSW) reported total net sales of $1.95 billion for the nine months that ended October 31, compared with $1.86 billion reported for the same period a year earlier (both segments generated higher sales year-over-year). At the same time, the company’s net income for the nine-month period of fiscal year 2015 totaled $124.3 million or $1.39 per share, up from $122.5 million or $1.35 per share reported a year ago.

Although DSW reported lower comparable store sales for the third quarter of fiscal year 2015 relative to the third quarter of the prior year, the company appears to be trading at a discount at the moment. The stock trades at a trailing price-to-earnings ratio of only 13.23, which is substantially below the average of 21.04 for the S&P 500 companies. Moreover, analysts anticipate earnings per share of $1.61 for fiscal year 2016, giving the stock a forward P/E of 14.27 (compared to 15.65 for the S&P 500 Index). To sum up, there seems to be some upside for the stock in the upcoming year, even without considering the strengthening consumer sentiment in the nation. Nonetheless, the hedge fund sentiment towards the stock was negative in the third quarter, as the number of smart money investors in our system with positions in the footwear retailer dropped to 29 from 36 quarter-over-quarter. Jim Simons’ Renaissance Technologies reported owning 1.02 million shares of DSW Inc. (NYSE:DSW) through its 13F for the September quarter.

As stated by a separate 13G filing, Steven Cohen’s family office recently added a 1.69 million-share position in POZEN Inc. (NASDAQ:POZN) to its portfolio, which constitutes 5.2% of the company’s outstanding shares. On June 8, the specialty pharmaceutical company announced an agreement to acquire Canadian pharmaceutical company Tribute Pharmaceuticals Canada Inc. for approximately $146 million and move its domicile to Ireland so as to cut its tax bill. Later in December, the company confirmed the merger’s plans and announced that the soon-to-be combined company, which will be renamed Aralez Pharmaceuticals Inc., will move its domicile from Ireland to Canada. The Canadian domicile provides a similar corporate and tax structure to the one offered in Ireland, while the main reason for changing the “inversion” plans lies on the fact that the combined entity will benefit from Tribute’s business foundation and strong presence in Canada. The transaction is anticipated to close in the first quarter of this year.

In the meantime, POZEN’s stock is down by 13% over the past year. It should also be noted that a syndicate of healthcare investors, which include widely-known healthcare-focused hedge fund Deerfield Management, sealed an agreement to provide up to $350 million in growth capital for the soon-to-be combined company, which is aimed at supporting the company’s anticipated commercial launches of YOSPRALA and Fibricor, and facilitate future product and company acquisitions. A total of 18 smart money investors in our system had stakes in the company at the end of the third quarter, accumulating nearly 29% of its shares. Jane Mendillo’s Harvard Management Co acquired a 1.22 million-share stake in POZEN Inc. (NASDAQ:POZN) during the third quarter.

Disclosure: None