Decade Capital Management LLC is a multinational investment management firm and a subsidiary of Israel Englander‘s Millennium Management LLC. The New York-based fund exclusively provides its services to a select group of private investment funds. The fund’s 13F filing with the U.S. Securities and Exchange Commission for the report period of March 31 revealed that the firm had a public equity portfolio value of $809.05 million. Considering the fund’s activities during the quarter, it’s clear that the analysts at Decade Capital were bullish on the market, seeing as the firm made 57 new purchases and increased its ownership position in 42 stocks. Its investment portfolio showed that it invested mainly in healthcare, which accounted for 46% of its portfolio. Being one of the hedge funds that we monitor, our experts considered some of its top small-cap healthcare picks, namely Insulet Corporation (NASDAQ:PODD), Molina Healthcare, Inc. (NYSE:MOH), and WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX). This article looks into the performance of these three stocks.
The top small-cap picks of Decade Capital are notable to us given the fact that it’s investment firms like it that 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 142% since it was launched at the end of August 2012, beating the market by nearly 85 percentage points (see the details).
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The first of Decade Capital’s top small-cap picks that we are going to look into is Insulet Corporation (NASDAQ:PODD), in which the fund more than tripled its stake, increasing its position to 629,100 shares worth $20.98 million by March 31, from 178,991 shares held at the end of 2014. A keen look at the stock’s performance shows that the value of the stock has declined over the past six months, although its management remains more than optimistic about its prospects, signalling now may be a good time to get in at a discount, as Decade Capital has, and as company insiders have. May 28 saw the company’s CEO, Patrick Sullivan up his stake in Insulet Corporation (NASDAQ:PODD) by purchasing 20,000 shares at prices ranging from $27.74 to $28.08 on the open market. In terms of revenue, the company failed to meet expectations, with the underperformance being attributed to its delayed deliveries and a report issued by its leadership on reduced patient starts. Insulet, which focuses on making and distributing its OmniPod System used for insulin management, reported a loss of $0.21 in earnings per share in its most recent results, missing analysts’ consensus estimate of a loss of $0.10. A year-over-year comparison shows that the company’s revenue was down 11.6% for the quarter compared to the same quarter last year. A total of 25 hedge funds out of the more than 700 that we track were invested in the stock, having an aggregate of $382.78 million in investment value. Some of these hedge funds are David Greenspan‘s Slate Path Capital with 2.13 million shares, and Mariko Gordon’s Daruma Asset Management with 2.04 million shares.
At the end of the first quarter, Decade Capital held 242,121 shares of Molina Healthcare, Inc. (NYSE:MOH) valued at $16.29 million, down from the 310,000 shares it held at the end of the previous quarter. The ambulatory health services provider recently announced the pricing of 5 million shares of common stock at $67.75, with the proceeds being targeted for financing some of the company’s corporate functions, funding acquisitions, and repayment of debts, among other activities. In an expansion plan, and towards strengthening its medicare business, Molina Healthcare, Inc. (NYSE:MOH) announced plans to acquire parts of HealthPlus Insurance Co. According to the company’s most recent earnings results, its net income increased a whopping 525.90% compared to the respective quarter the previous year, while the company’s revenue growth also grew by a solid 53.3%, beating the industry average of 13.2%. Molina Healthcare, Inc. (NYSE:MOH) posted earnings per share of $0.56, beating analysts’ consensus estimate by $0.06. On a longterm basis of between three to five years, analysts expect the stock to register earnings per share of $24.33, which ranks it among the stocks analysts are most optimistic about in the sector in terms of growth. As of March 31, a total of 22 hedge funds were invested in the stock, having an aggregate investment value of $464.55 million. Some of these hedge funds are Samuel Isaly‘s OrbiMed Advisors, Englander’s Millennium Management, and billionaire Jim Simons’ Renaissance Technologies.
Decade Capital owned 389,735 shares of WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) with a market value of $15.11 million as of the latest 13F reporting period, it being one of the fund’s new purchases for the quarter. The biotechnology, pharmaceutical, and medical device R&D outsourcing company mainly has operations in China and the U.S, with the company having been working on ways to expand its operations in the latter. Last year, the Shanghai-based company acquired XenoBiotic Laboratories, Inc. towards expanding its laboratory testing operations in the U.S. Earlier this year, the company also acquired U.S.-based genomic analysis and bioinformatics company NextCODE Health for $65 million. Together with other companies, WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) made a proposal to acquire U.S. Innovative Biotechnology Company Ambrx Inc. in a deal that’s expected to be finalized in the current quarter, provided they receive the necessary regulatory approvals. The company posted earnings per share of $0.36, beating the $0.32 expected by analysts. In terms of revenue, a year-over-year comparison showed that its revenue grew by 22.7%. Out of the 730 actively reporting hedge funds that we tracked during the first quarter, 17 of them had stakes in the company at the end of the quarter, with their total investment valued at $114.92 million. A few of the funds that had stakes in the stock are Millennium Management, Dmitry Balyasny’s Balyasny Asset Management, and Visium Asset Management.
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