George Soros had a position in the shares of Opko Health Inc. (NYSE:OPK) in his fund’s latest filings. Soros owned 235,600 shares of OPK valued at close to $4 million. Renaissance Technologies was the largest shareholder of OPK among hedge funds with a new position consisting of 1.25 million shares. Joining Soros and Renaissance with positions in OPK were Coe Capital and Sabby Capital; Coe upped its holdings by 42% to 205,000 shares, and Sabby’s position like Renaissance’s was a new one at 177,551 shares. Seven funds added positions in OPK shares, while two funds sold off their holdings. Millennium Management sold out of the largest position among funds at about 69,000 shares. In addition to long positions, some hedge funds may be shorting OPK as the stock has a substantially high short interest of 73% as a percentage of its float. As a percentage of its shares outstanding, however, OPK’s short interest is much smaller at 11% according to S&P. This reflects the high ownership of OPK by insiders who own 51% of the company’s shares outstanding. It is likely some arbitrage traders are shorting OPK in anticipation of its acquisition of Bio-Reference Laboratories (BRLI) as well.
Taking note of how hedge funds are trading OPK is important because as Insider Monkey points out, hedge funds have a history of picking outperformers, especially when it comes to smaller-cap stocks. The top small-cap picks of George Soros are notable to us given the fact that it’s investors like him who add great value to our small-cap strategy system, as they are heavily invested in the success of their small-cap picks and have poured considerable resources into identifying undervalued or under-the-radar companies to invest in. We have found that collectively, hedge funds’ top small-cap picks provide a great investment opportunity, with our strategy having returned over 139% since it was launched at the end of August 2012, beating the market by 81 percentage points (see the details). Don’t get sucked into the mediocre returns of more popular large-cap stocks, invest in the best ideas of the best money managers and beat the market, as the Insider Monkey small-cap strategy has each and every year since it’s launch.
In addition to tracking funds, keeping an eye on insider trading is important because studies show that certain insider purchases have outperformed the market by an average of 7 percentage points per year. Insiders sell for various reasons, but there is really only one reason why they buy and the insider buying at OPK has been significant. Phillip Frost, OPK’s Chairman and CEO, has continuously purchased shares of the company in the open market throughout June and July. Frost purchased over 25,000 shares of the company in July alone. Over the last three months, insiders have purchased in excess of 350,000 shares and sold only 100 – showcasing strong bullish sentiment in OPK on an insider front.
Opko Health Inc. (NYSE:OPK) just completed enrollment in phase 3 trials for its human growth hormone (HGH) treatment, which is a long-lasting treatment that decreases the frequency of injections and aids in human growth hormone deficiency. The company has others treatments in phase 3 trials and one product in the market. OPK is working with Pfizer (PFE) to take its HGH therapy to market; thus, OPK has a major player to distribute its treatment when it goes to market assuming success in phase 3 trials. The market for HGH therapies is approaching $2 billion. OPK’s 4Kscore test is its product currently gaining share in the market for diagnosing prostate cancer. The treatment was recently recommended by the National Comprehensive Cancer Network (NCCN), a consortium of 26 cancer centers in the U.S., as an effective diagnostic test for detecting prostate cancer in its early stages. OPK’s purchase of BRLI will help the company with its adoption of 4Kscore as BRLI has existing relationships with insurers that can be leveraged for greater adoption and the greater size of the company will give it more clout in negotiations for not only 4kscore but other treatments and diagnostics in the future as well.
