In this piece, we will take a look at the Top 10 holdings of Caligan Partners.
Founded in 2017, Caligan Partners is one of the most significant specialty hedge funds. David Johnson is the brainchild behind the hedge fund, which has its headquarters in New York, specializing in long-biased activist equity investment strategies. It sometimes invests in distressed debt and investments with high absolute return profiles.
Caligan Partners focuses on investment opportunities in the healthcare sector, primarily in the United States. At present, the industry dominates its holdings, accounting for 100% of its overall value of investments. The firm also invests in long and short positions targeting equity opportunities of public companies in the healthcare sector.
The bulk of the investments in the fund are in small-cap companies. These are stocks with a market capitalization exceeding $100 million, representing 8% of the total value of the investments. Conversely, investments in large-cap stocks are minimal, amounting to just about 0.1% of the total value. The average market capitalization of the companies in the fund’s portfolio is around $1.07 billion.
Its current portfolio value is $378 million, with a turnover rate of 18%. Nevertheless, one of the top 10 holdings of Caligan Partners accounts for more than 40% of the hedge fund’s portfolio. The performance of stocks bought by Caligan Partners within three months outperforms four times out of 14 transactions compared to the return of the S&P 500 within the same period.
In addition, Caligan Partners also engages in activist investments by pushing for strategic changes that have the potential to grow shareholder value. Management changes are part of the changes the hedge fund advocates in companies where it gets involved, as it often pushes for board seats to influence management decisions and companies’ directions.
Caligan Partners is one of the hedge funds that contributed to the strong performance of activist investments in 2023. As activist investors pushed corporations to change leadership and streamline their operations to enhance shareholder value, they generated an average return of 20.2%.
Caligan Partners and other activist investors have gained more power to secure board positions. The investors secured 134 positions on boards in 2023, marking a 30% rise from the year before and the highest number since 2018.
Activist investors also clinched 36 positions in the final round of voting at general meetings in 2023, a 125% rise from the year prior and a record high. They also secured positions in 80% of the campaigns, up from 33% in 2022. Additionally, the hedge fund also urges companies to consider strategic alternatives such as the divestment of some assets or fill sale for companies that have underperformed.
Source:pexels
The fact that the top 10 holdings of Caligan partners come from the healthcare sector is not surprising. Healthcare is often considered a defensive sector that tends to outperform in choppy markets as the one experienced last year due to high interest rates. However, that was not the case, as the overall sector underperformed the S&P 500, which was up by 24% by year-end.
The S&P 500 Healthcare Index was down by about 0.4% in 2023. Healthcare company shares fell significantly as the benefits from the pandemic and the rollout of vaccines dropped. Although companies that produce medical devices might have faced a more challenging outlook, those that develop weight loss drugs have performed much more positively. The US Federal Reserve’s strategy of raising interest rates and keeping them high for long has been putting pressure on the healthcare industry.
The outlook also does not look suitable for the sector, given that healthcare stocks are pressured during election years as presidential hopefuls pledge reforms targeting drug prices and health insurance. Nevertheless, there is a possibility that Caligan Partners is one of the hedge funds that will benefit investors, taking note of depressed valuations in the healthcare sector. The sentiment among investors and experts in the healthcare field is unexpectedly optimistic. Although many anticipate moderate expansion and certain areas are in a stronger position than the rest, there’s a widespread feeling that the industry is set for a recovery.
Methodology
Caligan Partners is one of the top specialty hedge funds specializing in healthcare stocks, often considered defensive plays when the economy faces uncertainties. In this article, we discuss the top 10 holdings of Caligan Partners and why they stand out for gaining exposure in the healthcare stocks. We referred to the original 13F filing by Caligan Partners on the SEC’s website to determine the hedge fund’s stake in each stock. The stocks are ranked based on the hedge fund’s equity value.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top holdings of Caligan Partners
10. Outlook Therapeutics Inc (NASDAQ:OTLK)
Caligan Partners’ Equity Stake: $5.97 Million
Number of Hedge Fund Holders: 9
Outlook Therapeutics Inc (NASDAQ:OTLK) sums up the top 10 holdings of Caligan Partners as a clinical-stage biopharmaceutical company that develops and commercializes antibodies for various ophthalmic indications. While Outlook Therapeutics Inc (NASDAQ:OTLK) has been trading in a range for the better part of the year, it is up by about 11%.
Early this year, Outlook Therapeutics Inc (NASDAQ:OTLK) received a signed contract from the FDA through a Special Protocol Agreement (SPA) for the NORSE EIGHT clinical study protocol examining ONS-5010 in patients with neovascular age-related macular degeneration (AMD). The company also entered into securities purchase agreements with specific institutional and accredited investors for a maximum of $172 million in total funds to support the development of O NS-5010.
A total of 9 hedge funds tracked by the Insider Monkey database held stakes in Outlook Therapeutics Inc (NASDAQ:OTLK) in the first quarter of 2024, up from 4 in the preceding quarter.
9. Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB)
Caligan Partners’ Equity Stake: $9.55 Million
Number of Hedge Fund Holders: 11
Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) is one of the top 10 holdings of Caligan Pharmaceuticals and one of the best-performing stocks. It is a commercial-stage biopharmaceutical company developing and commercializing antibody-based cancer treatment therapies. Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) is already up by over 70% for the year as it tries to bounce back from imploding the past two years.
The cancer treatment drug firm named Peter Pfreundschuh, its latest Chief Financial Officer. The appointment comes when Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) is pushing for the launch of DANYELZA® in the US and progresses with its cutting-edge Self-Assembly DisAssembly Pretargeted Radioimmunotherapy (SADA-PRIT) technology platform.
As of the end of the first quarter 11 out of 920 hedge funds tracked by Insider Monkey held stakes in Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB).
8. Agios Pharmaceuticals, Inc. (NASDAQ:AGIO)
Caligan Partners’ Equity Stake: $14.17 Million
Number of Hedge Fund Holders: 30
Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) is a biopharmaceutical company that discovers and develops medicines in cellular metabolism. It is one of the top 10 holdings of Caligan Partners and one of the best-performing stocks in its portfolio. Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) is already up by more than 113%. The rally comes on the backdrop of the company agreeing to sell 15% royalty in a brain cancer drug, Royalty Pharma, for $905 million.
In a report to clients, RBC Capital Markets analyst Gregory Renza called it a “welcome and optimal move on monetizing a valuable non-core asset.” Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) sells a drug called Pyrukynd for patients with anemia and PK deficiency, a disease that chronically destroys red blood cells. But Agios is working on expanding the same drug, under the test name mitapivat, to other blood diseases.
The sale is expected to strengthen Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) ‘s cash position, which it can use to accelerate its other candidate programs. A total of 30 hedge funds in Insider Monkey’s database of 920 funds had stakes in Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) as of the end of Q1 2024, compared to 21 in the previous quarter.
7. Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA)
Caligan Partners’ Equity Stake: $14.98 Million
Number of Hedge Fund Holders: 17
Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) is a biotechnology company and one of the top 10 holdings of Caligan Pharmaceuticals. It focuses on discovering and developing small-molecule drugs for treating viral infections and liver diseases.
After dropping by about 80% in 2023, Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) is again on the move in 2024, trying to recoup the losses. It is already up by about 16%. The rally comes on the heels of the company delivering revenues of $17.1 million in Q1 2024 compared to $17.8 million a year ago in the same quarter. Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA)’s net loss improved to $31.2 million from $37.7 million a year ago.
Among the 920 hedge funds tracked by Insider Monkey’s database, 17 had acquired and held Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) shares as of the end of Q1 2024.
6. Verona Pharma plc (NASDAQ:VRNA)
Caligan Partners’ Equity Stake: $20.86 Million
Number of Hedge Fund Holders: 22
Verona Pharma plc (NASDAQ:VRNA) is a clinical-stage biopharmaceutical company specializing in developing and commercializing therapies for treating respiratory diseases. The stock is up by more than 15% for the year, having received a boost from the US Food and Drugs Administration approving its lead pipeline product for chronic obstructive pulmonary disease for the maintenance treatment of COPD in adult patients.
With the approval, it became Verona Pharma plc (NASDAQ:VRNA) ‘s first-ever marketed product, with a commercial launch slated for the third quarter. This authorization also places the firm in a leading position over Sanofi’s SNY/Regeneron’s REGN top-selling medication Dupixent, which is presently undergoing the FDA’s evaluation for an expanded use indication in COPD. These firms are requesting the FDA’s consent for their medication to be used as an additional treatment for certain adult patients with COPD who are not under control.
On the other hand, 22 out of 920 hedge funds in the Insider Monkey database held stakes in Verona Pharma plc (NASDAQ:VRNA) as of the end of Q1 2024.
5. Exelixis Inc (NASDAQ:EXEL)
Caligan Partners’ Equity Stake: $26.12 Million
Number of Hedge Fund Holders: 30
Exelixis Inc (NASDAQ:EXEL) is an oncology company specializing in discovering, developing, and commercializing new cancer medicines. Cabometyx is its most prized asset. It was the initial treatment for advanced renal cell carcinoma (RCC), or kidney cancer, to show enhancement in all three critical indicators of effectiveness: progression-free survival, overall survival, and objective response rate. Cabometyx is the top-rated treatment for RCC of its type and is also authorized for the treatment of hepatocellular carcinoma, a kind of liver cancer.
Exelixis Inc (NASDAQ:EXEL) has been the subject of activism over the past year over concerns over the level of research and development and lack of discipline in its research and development plan. The activism paid off, as the stock increased by 35% in 2023.
30 hedge funds out of 920 tracked by Insider Monkey held stakes in the company as of the end of Q1 2024, down from 33 in Q4 2023.
4. Evolus, Inc. (NASDAQ:EOLS)
Caligan Partners’ Equity Stake: $26.44 Million
Number of Hedge Fund Holders: 24
While Evolus, Inc. (NASDAQ:EOLS) operates in the healthcare sector, it specializes in developing and commercializing beauty products to enhance adult appearances. The beauty company is flexing its muscle in the aesthetics markets, focusing on the next generation of beauty consumers.
Evolus, Inc. (NASDAQ:EOLS) has been up by more than 20% for the year. The rally comes on the company delivering impressive Q1 2024 results whereby revenues were up by 42% to $59.3 million, affirming it is on course to achieve $700 million in revenue by 2028. Evolus, Inc. (NASDAQ:EOLS) is also on track to achieve profitability in Q4 and full-year profit by 2025.
Another factor boosting the beauty company’s rise is the report that its Jeuveau (DWP-450) (prabotulinumtoxinA) is expected to be a strong competitor to Allergan’s Botox (botulinum toxin type A) for treating severe glabellar (frown) lines. A total of 24 hedge funds tracked by Insider Monkey held stakes in Evolus, Inc. (NASDAQ:EOLS) in Q1 2024.
3. Anika Therapeutics, Inc. (NASDAQ:ANIK)
Caligan Partners’ Equity Stake: $35.56 Million
Number of Hedge Fund Holders: 19
Anika Therapeutics, Inc. (NASDAQ:ANIK) is a medical instruments & supplies company and one of the top 10 holdings of Caligan Partners. It specializes in creating and delivering advancements in early intervention orthopedic care in osteoarthritis (OA) pain management, regenerative solutions, sports medicine, and arthrosurface joint solutions.
While Anika Therapeutics, Inc. (NASDAQ:ANIK) was down by about 23% in 2023, it is up by about 27% as the bounce back continues at a gathering pace. The bounce back comes on Caligan Partners disclosing a 9.7% stake in the company in the first quarter and engineering an activist campaign to influence the company’s strategic direction.
The activist campaign is already bearing fruit as the hedge fund has secured two board seats and pushed Anika Therapeutics, Inc. (NASDAQ:ANIK) to authorize a $40 million share repurchase program to return value to shareholders.
As of the end of the first quarter, 19 hedge funds out of 920 tracked by Insider Monkey held stakes in the company, a drop from 21 as of the end of the fourth quarter of 2023.
2. Alimera Sciences, Inc. (NASDAQ:ALIM)
Caligan Partners Equity Stake: $55.55 Million
Number of Hedge Fund Holders: 12
Alimera Sciences, Inc. (NASDAQ:ALIM) is one of the top holdings of Caligan Partners, offering exposure to the development and commercialization of ophthalmic retinal pharmaceuticals. When the hedge fund first acquired stakes in the company, it reiterated that its assets were meaningfully undervalued. It reiterated plans to work with the board and management to create shareholder value as part of its activist campaign.
The hedge fund’s efforts appear to bear fruits, as Alimera Sciences, Inc. (NASDAQ:ALIM) has bounced back after being under pressure for the better part of 2023. It has increased by more than 70% over the past 12 months. A good chunk of the rally also comes from the company acquired by ANI Pharmaceuticals in a deal valued at $381 million.
Twelve hedge funds out of the 920 tracked by Insider Monkey held stakes in Alimera Sciences, Inc. (NASDAQ:ALIM) as of the end of the first quarter, an improvement from 11 as of the end of the fourth quarter of 2023.
1. Liquidia Corporation (NASDAQ:LQDA)
Caligan Partners’ Equity Stake: $152.83 Million
Number of Hedge Fund Holders: 23
Liquidia Corporation (NASDAQ:LQDA) is Caligan Partners’ biggest holding, accounting for 41.61% of its total portfolio. The biopharmaceutical company develops, manufactures, and commercializes various products for unmet patient needs. Its lead product is YUTREPIA, an inhaled dry powder used to treat pulmonary arterial hypertension.
After rallying by more than 80% in 2023, Liquidia Corporation (NASDAQ:LQDA) has been under pressure for the better part of 2024 and is flat for the year. The underperformance has everything to do with the company’s disappointing Q1 2024 results, with revenues dropping 33% to $3 million. The company also posted a net loss of $40.9 million compared to $11.7 million delivered in the same quarter last year.
As of the end of the first quarter, 23 hedge funds tracked by the Insider Monkey database held stakes in Liquidia Corporation (NASDAQ:LQDA), up from 22 as of the end of the fourth quarter of 2023.
There are tremendous investment opportunities and value to unlock by tracking the top 10 holdings of Caligan Partners spread across the vast healthcare sector. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
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