Jason Karp’s Tourbillon Capital Partners recently filed a 13G form with the SEC indicating that it now owns 7.0% of the common shares of Recro Pharma Inc. (NASDAQ:REPH), 646,552 shares in all. This represents a new position for the hedge fund, as it did not report a stake in the company in its most recent 13F filing.
Tourbillon Capital Partners is a fundamentally driven long/short equity hedge fund established by Jason Karp in 2013. The firm employs a low net exposure strategy, implying that its long positions are relatively in balance with its short positions. Tourbillon has $4.53 billion in assets under management, which subsequently categorizes it as a large investment firm with assets above $1 billion, and is led by former SAC Capital Advisors portfolio manager, Jason Karp. Karp has previously worked at SAC’s CR Intrinsic unit as a generalist portfolio manager and director of research during the period of 2005 to 2009. After a relatively quick stop at Carlson Capital, where he served as co-chief investment officer, Karp launched his own shop in 2013 with roughly $250 million under management. Tourbillon’s most recent filing reveals that the fund’s top ten holdings represent 43.83% of its entire portfolio and that its holdings are diversified among the following sectors: 37.80% in the services sector, 19.22% in the technology sector, and 14.31% and 6.45% in the healthcare and consumer/non-cyclical sectors, respectively. The hedge fund manages a public equity portfolio with a value of $3.88 billion as of March 31, 2015.
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Recro Pharma Inc. (NASDAQ:REPH) is a clinical-stage specialty pharmaceutical company that focuses on developing non-opioid therapeutics for the treatment of pain, initially intended for post-operative pain. As of now, the company has two product candidates in late stage clinical trials for the management of acute post-operative pain. The first product candidate is the recently-acquired IV/IM meloxicam, which is a proprietary, long-acting preferential COX-2 inhibitor that has successfully completed multiple Phase II clinical trials and is ready to begin the vital Phase III clinical trials. The second product candidate is Dex-IN, which is a proprietary intranasal formulation of dexmedetomidine.
While dexmedetomine may not ring a bell for the average investor, that’s not overly important. What is important is not what Dex-IN consists of and what it is, it’s how the drug travels from the lab to our medicine cabinet. Not so long ago, Dex-IN was being tested in Phase II clinical trials. On July 17, Recro Pharma announced positive efficacy results in the Phase II clinical trial for this treatment. This is great news for the shareholders of Recro Pharma and for the company itself. This implies that the commercialization of its lead product candidates is around the corner. Dex-IN met the primary endpoint of the mid stage clinical trial in proving significant pain relief compared to a placebo over 48 hours. Even more to that, Recro Pharma announced its plans to meet with the U.S. Food and Drug Administration in order to discuss the company’s Phase III plans. If approved, Dex-IN would be the first and only acute post-operative drug in its class of drugs. So the company might unlock a flourishing revenue stream with the approval of this drug.
The shares of Recro Pharma have increased by just under 480% year-to-date, while the company’s market capitalization has reached a figure of $130.02 million. Just recently, the company announced that it had closed its private placement that was announced on July 1. Following the company’s securities purchase agreement with a group of institutional investors led by Kevin Kotler’s Broadfin Capital, Recro Pharma issued nearly 1.38 million shares of common stock, which provided $16 million in gross proceeds. Kevin Kotler’s fund has disclosed its own enhanced position, of 2.06 million shares in the pharmaceutical company, via a recently-amended 13G filing with the SEC (see more details). Recro Pharma intends to use the raised capital to fund the clinical development of its late stage lead candidates. It’s also worth mentioning that the purchase price for the common stock was $11.60 per share, whereas the stock is currently trading at $16.58 per share. Dov Gertzulin’s DG Capital Management is among the largest shareholders of Recro Pharma Inc. (NASDAQ:REPH) with an ownership stake of 314,718 shares.
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