In third-quarter letter to investors, Larry Robbins’ Glenview Capital discussed the fund’s investments in four names in the pharma space, which also included AbbVie Inc (NYSE:ABBV). The billionaire investor discussed the pricing of healthcare products across the entire industry, pointing out a few examples in which companies have exaggerated in regards to their health care pricing actions. Larry Robbins said in the letter that “We scrubbed our companies’ pricing history and strongly believe that the growth in earnings amongst our portfolio holdings has been driven through volume growth and responsible aggregate pricing decisions”. However, the billionaire hedge fund manager points out that “In the heat of primary Presidential elections, candidates seized on this example of horrific corporate greed to paint all pharma companies as evil, and to vow if elected to bring these big evil pharma companies to their knees”. Glewnview Capital “did not see the potential that so much of pharma could auto-correlate around the fears of the bad acts of a few, or the political fears of several, to the extent that they did”.
Moving on to the hedge fund’s investment in AbbVie Inc (NYSE:ABBV), which was the fund’s largest position, Larry Robbins showed his discontent with FDA’s unexpected notice that AbbVie’s “Hepatitis-C drug needs to contain a warning label as a result of an elevated incidence of liver failure in patients, “most” of whom were already suffering from significant liver disease”. Additionally, the letter said the following:
“This random grenade to our largest holding was of course ill-timed, and the reaction of shareholders was accentuated by the cascading equity prices throughout all of healthcare and further fears of hedge fund and Glenview liquidation. This news is primarily disappointing to the affected patients and families and financially is disappointing to us, but is not material to our long-term thesis in AbbVie even under the worst case scenario, which would involve zero future sales of their current Hep-C compound.”
How are hedge funds trading AbbVie Inc (NYSE:ABBV)?
At Q4’s end, a total of 70 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 10% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Julian Baker and Felix Baker’s Baker Bros. Advisors has the most valuable position in AbbVie Inc (NYSE:ABBV), worth close to $851.5 million, amounting to 7.1% of its total 13F portfolio. On Baker Bros. Advisors’s heels is Larry Robbins of Glenview Capital, with a $802.4 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Neil Woodford’s Woodford Investment Management, Samuel Isaly’s OrbiMed Advisors and D.E. Shaw & Co. L.P., founded by David E. Shaw.
Seeing as AbbVie Inc (NYSE:ABBV) has witnessed declining sentiment from the smart money, it’s easy to see that there exists a select few hedgies that decided to sell off their entire stakes last quarter. Interestingly, Daniel S. Och’s OZ Management said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling about $327.3 million in stock. Jacob Doft’s fund, Highline Capital Management, also sold off its stock, about $122.9 million worth. These moves are interesting, as total hedge fund interest fell by 8 funds last quarter.
The final page of this article reveals the hedge fund activity in other companies with market capitalizations close to the one of AbbVie.
