Healthinvest Partners’ Top Stock Picks For 2016

Sweden-based healthcare focused long/short equity hedge fund Healthinvest Partners AB was founded in 2006 by Anders Hallberg and Carl Bennet. The fund primarily invests in small-cap healthcare companies that are among the leaders in their respective segments. Since the fund is focused on the long-term investment horizon, it generally buys stocks that it deems undervalued or those that exhibit stable free cash flows. Healthinvest Partners’ HealthInvest Value Fund B-SEK has generated returns of over 312% in the six years starting from January 1, 2009. According to Healthinvest Partners’ latest 13F filing with the Securities and Exchange Commission, its US equity portfolio at the end of December was worth nearly $212.5 million, while the top five equity holdings accounted for over half of this value. In this article we are going to take a closer look at Healthinvest’s largest positions.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here).

#5 Magellan Health Inc (NASDAQ:MGLN)

– Shares Owned by Healthinvest Partners Ab (as of December 31): 248,934

– Value of Holding (as of September 30): $15.35 million

Amid a 12% rise in Magellan Health Inc (NASDAQ:MGLN)’s stock during the fourth quarter, Healthinvest Partners reduced its stake in the company by 4%. Shares of Magellan Health Inc (NASDAQ:MGLN) saw a decent rise in December after the company provided an upbeat guidance for the current year. The company expects fiscal 2016 full year diluted EPS to be in the range of $2.06 to $2.83 and full year revenues to be in the range of $4.28 billion to $4.52 billion. In January, analysts at Barclays downgraded the stock to ‘Underweight’ from ‘Equal Weight’ but kept their price target at $61. Billionaire Jim Simons’ Renaissance Technologies reported holding 974,799 shares in its 13F filing for the fourth quarter.

#4 AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)

– Shares Owned by Healthinvest Partners Ab (as of December 31): 520,000

– Value of Holding (as of September 30): $15.7 million

AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)’s stock went down by 42.5% during the third quarter of 2015 and extended the losses in the fourth quarter, falling by another 24%. However, amid the drop, Healthinvest Partners initiated a stake in the company during the fourth quarter. AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)’s stock now trades at forward price to earnings multiple of only 3.9, which is significantly lower when compared to its peers. For the fourth quarter, analysts expect the company to report EPS of $1.16 on revenue of $120.99 million, much better than the EPS of $0.6 on revenue of $53.30 million that it delivered a year earlier. During the fourth quarter, Ken Griffin’s Citadel Investment Group added some 357,500 shares to its holding in AMAG and reported 441,000 shares held as of the end of December.

#3 Gilead Sciences, Inc. (NASDAQ:GILD)

– Shares Owned by Healthinvest Partners Ab (as of December 31): 229,300

– Value of Holding (as of September 30): $23.20 million

Healthinvest Partners Ab sold 20,000 shares of the biopharmaceutical major Gilead Sciences, Inc. (NASDAQ:GILD) during the fourth quarter. Shares of Gilead Sciences have lost around 11% since the beginning of 2016 amid an overall market decline, even though the company delivered strong results for the last quarter with EPS of $3.32 beating the estimates of $3.00, while revenue of $8.51 billion was better than the expected $8.14 billion. According to many experts, Gilead Science current valuation is low taking into account its businesses and balance sheet and the fair value of its stock is significantly above the current levels. Another investor bullish on Gilead is John Armitage’s Egerton Capital limited, which reported 4.29 million shares in its latest 13F filing.

#2 GNC Holdings Inc (NYSE:GNC)

– Shares Owned by Healthinvest Partners Ab (as of December 31): 821,190

– Value of Holding (as of September 30): $25.47 million

GNC Holdings Inc (NYSE:GNC) also represents a new position in Healthinvest Partners’ portfolio during the fourth quarter. Shares of GNC Holdings Inc (NYSE:GNC) ended the fourth quarter 22% in the red, mainly on the back of weak financial results reported for the previous quarter. For the last three months of 2015, GNC Holdings posted EPS of $0.62, beating the estimates by $0.01, while the revenue of $618.2 million, was below the expectations. In addition, the company has recently hiked its dividend to $0.20 and its stock currently sports a dividend yield of 2.75%. Scott Scher & Michael Prober’s Clovis Capital Management is another shareholder of GNC Holdings, reporting a new position that contains 814,650 shares in its latest 13F filing.

#1 LifePoint Health Inc (NASDAQ:LPNT)

– Shares Owned by Healthinvest Partners Ab (as of December 31): 373,430

– Value of Holding (as of September 30): $27.41 million

Healthinvest Partners’ decision to increase its stake in LifePoint Health Inc (NASDAQ:LPNT) by 18% during the fourth quarter pushed LifePoint Health Inc (NASDAQ:LPNT) to become the fund’s largest equity holding at the end of December. Shares of LifePoint Health reached a lifetime high of $88.18 in July last year and have been on a gradual decline since then. Last week, LifePoint Health reported its financial results for the last quarter, which included EPS of $1.11, versus estimates of $1.06, while revenue of $1.37 billion, was slightly below the expected $1.39 billion. Ric Dillon’s Diamond Hill Capital disclosed holding 1.25 million shares of LifePoint Health in its 13F filing for the fourth quarter.

Disclosure: None