Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third-quarter 2023 investor letter. A copy of the same can be downloaded here. September saw another duration-driven sell-off in equities similar to what the market witnessed in 4Q 2021 and parts of 2022, but Performance for July-August was meaningfully different from September. In the quarter, the fund fell -3.28% and -3.47%, gross and net of fees, roughly in line with the -3.13% and -3.27% returns of the Russell 1000 Growth and S&P 500 indexes, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Polen Focus Growth Strategy highlighted stocks like Novo Nordisk A/S (NYSE:NVO) in the third quarter 2023 investor letter. Headquartered in Bagsvaerd, Denmark, Novo Nordisk A/S (NYSE:NVO) is a healthcare company. On November 6, 2023, Novo Nordisk A/S (NYSE:NVO) stock closed at $101.08 per share. One-month return of Novo Nordisk A/S (NYSE:NVO) was 9.80%, and its shares gained 75.71% of their value over the last 52 weeks. Novo Nordisk A/S (NYSE:NVO) has a market capitalization of $451.711 billion.
Polen Focus Growth Strategy made the following comment about Novo Nordisk A/S (NYSE:NVO) in its Q3 2023 investor letter:
“We added new positions in Eli Lilly and Novo Nordisk A/S (NYSE:NVO) in the third quarter. We have been monitoring Lilly and Novo Nordisk for some time, and new clinical results from a recent drug trial give us confidence in the large upside potential for GLP-1s. These results from a Novo Nordisk study showed impressive cardiovascular outcomes for its GLP-1, Wegovy. This study of over 17,000 overweight or obese people with established cardiovascular disease (but without diabetes) showed that Wegovy reduced the likelihood of major adverse cardiovascular events (heart attack, stroke, sudden cardiac death) by over 20% for up to five years. This large and well-controlled trial helps to demonstrate that the weight loss benefits of GLP-1s (likely similar for Mounjaro and Wegovy) lead to better health outcomes for patients and likely save the healthcare system significant amounts of money over the long term. In our view, this makes it very unlikely that payors and governments will deny patient access and reimbursement for these drugs for the long haul (hence the positive stock price moves for Lilly and Novo when the data was released mid-quarter).
We have started with a small 1% position in Lilly, but when paired with our new holding in Novo Nordisk at 2% (NVO is slightly larger as its valuation is lower), it represents a 3% combined position in the two companies we expect to maintain a duopoly in this large drug class over the next several years.
Novo Nordisk has a long history as the leader in diabetes pharmaceuticals. It is much more narrowly focused on diabetes than Lilly with its GLP-1 drugs, Ozempic and Wegovy (Wegovy is the same drug as Ozempic but uses a different name for obesity), driving most of the company’s revenue and earnings growth. The cardiovascular outcomes trial mentioned above is a big positive for Novo. It establishes the duopoly with Lilly in insulin management for Type 2 diabetics and weight loss for the huge number of overweight and obese people across the globe.
Novo has more legacy diabetes products that its newer drugs will cannibalize, but our research indicates that we can expect high-teens earnings per share growth from Novo over the next five years. In addition, both Novo and Lilly have next-generation diabetes and weight loss drugs in development that appear even more effective than the current offerings while also offering new treatment modalities, such as oral drugs versus today’s auto injectables.”
A biopharmaceutical researcher observing a test tube full of interleukins in a lab.
Novo Nordisk A/S (NYSE:NVO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Novo Nordisk A/S (NYSE:NVO) at the end of second quarter which was 46 in the previous quarter.
We discussed Novo Nordisk A/S (NYSE:NVO) in another article and shared the list of cheap biotechnology stocks that smart investors are piling into. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
