The S&P 500 Health Care Index has advanced by 21.11% over the past three-year period, which is significantly higher than the S&P 500’s return of 10.30% over the same time span. The healthcare sector still continues to dominate, generating a return of 3.58% year-to-date, whereas the S&P benchmark is 4.90% in the red this year. Back in 2010, the U.S President Barack Obama signed the Affordable Care Act into law, which was accompanied by a lot of uncertainty at the time. However, the masses started to comprehend that ‘Obamacare’ was set to boost healthcare companies’ bottom lines. At the same time, the advancements in the biotech sector have also played an important role in the healthcare sector’s performance over the past few years. It is also anticipated that the healthcare sector is likely to experience growth in the years ahead, as more Americans have been receiving insured treatments, while boomers will boost up the demand for drugs and medical services as they age. That being said, we will now lay out a list of the most popular healthcare stocks among the billionaires monitored by our team, all of which could potentially represent great trading opportunities amid the recent turmoil in the equities markets.
As you will most probably notice later on in the article, we pay close attention to hedge fund sentiment and billionaires’ sentiment in particular. Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return 118% over the last 36 months and outperformed the S&P 500 Index by 60 percentage points (see the details here).
5. Walgreens Boots Alliance Inc (NASDAQ:WBA)
- Billionaires with Long Positions (as of June 30): 12
- Aggregate Value of Billionaires’ Holdings (as of June 30): $5.68 Billion
The number of billionaires invested in Walgreens Boots Alliance Inc (NASDAQ:WBA) at the end of the second quarter was down by two quarter-over-quarter, whereas the value of their investments in the stock grew by $1.35 billion. Although the recent broader market turmoil has impacted the stock’s performance, WBA shares are still over 13% in the green this year. Just recently, WBA initiated a deal with logistics company Postmates, which will enable the customers of the nation’s largest drugstore chain to order Wallgreen’s products through Postmates’ app and website for delivery. Andreas Halvorsen’s Viking Global boosted its stake in Walgreens Boots Alliance Inc (NASDAQ:WBA) by 69% to 24.63 million shares during the second quarter.
4. Valeant Pharmaceuticals Intl Inc (NYSE:VRX)
- Billionaires with Long Positions (as of June 30): 13
- Aggregate Value of Billionaires’ Holdings (as of June 30): $13.16 Billion
The total number of billionaires tracked by Insider Monkey with stakes in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) remained unchanged during the latest quarter, while the value of the stakes rose by $1.47 billion. The shares of Valeant have managed to recover from the recent market pullback, delivering a whooping return of 69% year-to-date. Surprisingly, Valeant’s stock was among the limited number of stocks in the market that closed in the green on Friday, when the S&P 500 lost 1.62%. It is also worth noting that an officer and director of the Canada-based Valeant have been piling up the stock over the last few months, which could suggest strong prospects for the company in the months ahead. Bill Ackman’s Pershing Square, the largest equity holder of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) in our database, left its position in the company unchanged during the recent quarter at 19.47 million shares.
3. Perrigo Company Public Limited Company (NYSE:PRGO)
- Billionaires with Long Positions (as of June 30): 15
- Aggregate Value of Billionaires’ Holdings (as of June 30): $1.93 Billion
Perrigo Company Public Limited Company (NYSE:PRGO) received quite a lot of attention and a strong vote of confidence from billionaires during the second quarter. 11 more billionaires had the stock in their portfolios at the end of the second quarter compared to the prior one. Similarly, the value of the money invested by billionaires in the stock was boosted by $1.70 billion during that period. Mylan NV (NASDAQ:MYL), another healthcare stock we will be discussing later on in the article, launched a tender offer earlier this week in an attempt to take control over Perrigo, whereas the target company urged its shareholder to reject the $27.4 billion offer, which is said to underestimate the company’s value. Kyle Bass of Hayman Advisors, who believes that the masses overlook China’s real problem, added an 836,593-share position in Perrigo Company Public Limited Company (NYSE:PRGO) to his portfolio during the latest quarter.
2. Mylan NV (NASDAQ:MYL)
- Billionaires with Long Positions (as of June 30): 16
- Aggregate Value of Billionaires’ Holdings (as of June 30): $2.38 Billion
We will now take a look at the aforementioned bidder, which is also very popular among billionaires. The number of billionaires invested in Mylan NV (NASDAQ:MYL) increased by ten during the second quarter, while the value of their investments increased by $1.29 billion over this period. As already mentioned, the Netherlands-based Mylan has been attempting to take over Perrigo, and offered $75 in cash and 2.3 of its shares for each share of the target company. Mylan’s stock performance has been disappointing lately, and its shares have lost over 12% since the beginning of the year. Jamie Zimmerman’s Litespeed Management acquired a new stake in Mylan NV in the second quarter, consisting of 425,000 shares.
1. Allergan PLC (NYSE:AGN)
- Billionaires with Long Positions (as of June 30): 24
- Aggregate Value of Billionaires’ Holdings (as of June 30): $10.78 Billion
Allergan PLC (NYSE:AGN) is not only the most popular healthcare stock among the billionaires observed by our team, but also represents the most popular stock across all industries and sectors. Nevertheless, the number of billionaires with long positions in Allergan shrank during the quarter by two, whereas the value of these positions increased by $259.16 million. Allergan also represents the most popular stock among the hedge funds tracked by Insider Monkey, with 151 investors owning the stock at the end of the second quarter (read more details here). At the same time, the shares of what is now Allergan have had a wild run over the last decade or so, delivering a return of over 778% over the past ten-year period. This year has not been bad either, as the shares have advanced by 18% year-to-date. Paulson & Co, started by John Paulson, is among the largest equity holders of Allergan PLC (NYSE:AGN) within our database, owning 7.17 million shares as of June 30.
Disclosure: None
