According to a recent filing with the Securities and Exchange Commission, Peter Kolchinsky‘s RA Capital has initiated a position in Alcobra Ltd (NASDAQ:ADHD), acquiring some 1.66 million shares of the company valued at about $9.96 million based on the current stock price. The stake amasses about 8.2% of the company’s outstanding shares.
Kolchinsky completed his Ph.D. in virology from Harvard in 2001 and in the same year launched RA Capital with an objective to invest in companies with promising drugs and technologies. Regulatory assets under the fund’s management currently stand at $1.78 billion and the market value of the firm’s public equity portfolio stood at $1.0 billion at the end of March, with the healthcare sector representing 90% of the holdings. RA Capital returned about 24.35% during the second quarter according to our metric for hedge fund performance. The methodology took into account the 13F long positions of the fund in companies which had a market cap greater than $1 billion. The estimated returns are based on a weighted average of these 24 long positions. The list of outperformers was headed by Dyax Corp. (NASDAQ:DYAX), BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), and Xencor Inc (NASDAQ:XNCR). It must be duly noted that the actual returns of the fund may differ greatly from our estimates, as the firm might have positions in derivatives, which it is not required to disclose, as well as undisclosed changes in the equity holdings during the quarter, none of which are factored into our calculations.
Follow Peter Kolchinsky's RA Capital Management
RA Capital is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 135%, beating the S&P 500 Total Return Index by greater than 80 percentage points (see the details).
Following RA Capital’s move into Alcobra Ltd (NASDAQ:ADHD), the firm has become one of the top three stockholders of the company, the other two being Julian Baker and Felix Baker’s Baker Bros., and Broadfin Capital, which is managed by Kevin Kotler. Interestingly, that trio is among the top five best performing hedge funds within our database in the second quarter, making Alcobra an extremely intriguing pick based on the pedigree of its backers. So far this year, Alcobra Ltd (NASDAQ:ADHD)’s stock has appreciated by more than 60% and was up by almost 16% during the second quarter.
During the March quarter, RA Capital decreased its stake in Dyax Corp. (NASDAQ:DYAX) by 14% to 4.21 million shares valued at $70.50 million. It was the fund’s second-largest equity holding and represented about 7.0% of its portfolio. The stock is up by almost 88% on a year-to-date basis, with the major part of the hike coming in early April as DX-2930, a drug for treating hereditary angioedema, posted promising early stage data. This led to a 58.15% gain for the stock in the second quarter. Stuart Weisbrod‘s Iguana Healthcare Management is the largest stockholder of Dyax Corp. (NASDAQ:DYAX) within our database, holding some 150,000 shares valued at $2.51 million.
BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)’s stock has risen by more than 24% year-to-date and it is RA Capital’s third-largest equity holding with some 6.93 million shares valued at $62.55 million. During the second trimester the stock posted more than 65% gains. Among the funds that we track, Baker Bros. is the largest stockholder of BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), owning some 10.48 million shares valued at $94.62 million.
RA Capital increased its exposure in Xencor Inc (NASDAQ:XNCR) by 55% during the first three months to 2.15 million shares valued at $32.93 million. The move has paid off, as the stock appreciated by more than 43% during the April-June quarter. Aside from RA Capital, Joseph Edelman’s Perceptive Advisors is the largest investor of Xencor Inc (NASDAQ:XNCR) among those that we keep track of, holding some 2.15 million shares valued at $32.93 million.
Disclosure: None
