Kevin Kotler’s Healthcare Fund Broadfin Capital Just Had A Disastrous Q1

#3 Nevro Corp (NYSE:NVRO)

 – Shares Owned by Broadfin Capital (as of December 31): 1.2 million

 – Value of Holding (as of December 31): $81.11 million

Nevro Corp (NYSE:NVRO) is the only company in this list in which Broadfin Capital reduced its stake during the fourth quarter, by 26%. Despite that, the fund was the largest shareholder of the company in our system at the end of December. Billionaire Israel Englander’s Millenium Management was one of the funds which initiated a stake in Nevro Corp (NYSE:NVRO) during the fourth quarter, purchasing 311,037 shares. Nevro Corp (NYSE:NVRO)’s stock ended the first quarter with a loss of 16.6%, but the 9.32% gains it has enjoyed in the last three trading sessions have brought its year-to-date loss down to 8%. Even though the sales of the company’s Senza implantable SCS (spinal cord stimulation) system have been quite good since its launch last June, analysts are concerned that the influx of new players in the SCS system space will significantly impact the company’s top-line. On March 29, analysts at Northland Securities initiated coverage on the stock with a ‘Market Perform’ rating and $48 price target, which represents potential downside of 22% from the stock’s current price.

#2 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

 – Shares Owned by Broadfin Capital (as of December 31): 900,000

 – Value of Holding (as of December 31): $91.48 million

If there is one stock that has burned the most number of hedge funds this year, it has to be Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Despite the greater than 50% decline in the stock during the second-half of 2015, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) remained one of the most popular companies among hedge funds going into 2016, with 83 out of the 785 actively reporting hedge funds in our system owning a stake in the company at the end of December. Unfortunately, Broadfin Capital was among the funds which initiated a stake in the company during the fourth quarter, likely anticipating that a floor had been reached. That was anything but the case however, as Valeant Pharmaceuticals Intl Inc (NYSE:VRX) lost more than two-thirds of its market capitalization in the first quarter, with much of that decline coming after the company reported its fourth quarter financial results on March 14. Most analysts are advising investors to stay away from the stock at the moment, until a clearer picture of its financial status emerges. Another hedge fund which initiated a stake in Valeant during the fourth quarter was Ahmet Okumus‘ Okumus Fund Management, which purchased 1.87 million shares.

#1 Horizon Pharma PLC (NASDAQ:HZNP)

 – Shares Owned by Broadfin Capital (as of December 31): 8.13 million

 – Value of Holding (as of December 31): $176.2 million

Horizon Pharma PLC (NASDAQ:HZNP) has been Broadfin Capital’s largest equity holding since the end of 2014. During the fourth quarter, the fund increased its stake in the company by 22%. Like other pharmaceutical stocks, Horizon Pharma PLC (NASDAQ:HZNP)’s stock also suffered a large decline during the first quarter, of 23.5%. However, analysts are generally quite bullish on the company in relation to its peers. The reasons for their bullishness stem from the company’s strong drug pipeline and the low valuation its stock currently trades at, consisting of a forward P/E ratio of 6.18. Furthermore, they also think that the company is in a decent financial position for future M&A deals. The 11 leading analysts on the Street who cover the stock currently have an average rating of ‘Overweight’ and an average price target of $34.91 on it, which represents a nearly two-fold increase from where it currently trades. Stephen Mandel‘s Lone Pine Capital held 15.6 million Horizon Pharma shares on December 31, making it the largest shareholder of the company in our database.

Disclosure: None