Wall Street has come down crashing on President Donald Trump’s sweeping tariffs, raising the risk of a trade war that could push the global economy into recession. Major equity indexes have recorded their worst days in years, with the S&P 500 slipping back into correction territory. Amid the bloodbath, the focus is slowly turning to defensive sectors poised to shrug off the long-term effects of the trade war.
The steep sell-off in the equity markets comes on the heels of Greenlight Capital’s David Einhorn reiterating early in the year that the long-running bull run had ascended to levels beyond common sense.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere.”
The sentiments came on the artificial intelligence-driven rally, propelling major indices to record highs. The gains to record highs also came with expectations that the Federal Reserve would aggressively cut interest rates on inflation levels that dropped close to the recommended 2% range. Things have changed, and the risk of inflation spiking has increased amid an aggressive trade war between the US and its trading partners.
READ ALSO: Top 10 Growth Stocks in David Tepper’s Portfolio and Billionaire Ken Fisher’s Top 13 Growth Stock Picks.
Greenlight Capital, a hedge fund founded by David Einhorn, has also found itself at a crossroads amid the deep sell-off in the market. Nevertheless, the hedge fund, which specializes in value-oriented strategies, boasts of significant exposure to healthcare stocks, offering some support as investors shun risky plays amid the corrective phase in the equity markets.
Healthcare stocks tend to hold up well in recessions as demand for healthcare services remains strong regardless of the prevailing economic situation. Consequently, the healthcare sector has been down by about 4% for the year, compared to a 14% decline in the S&P 500. The outperformance comes on the heels of Goldman Sachs chief US equity strategist David Kostin reiterating healthcare stocks are the way to go as the overall equity market remains in a corrective phase.
Given that healthcare accounts for about 17% of the US economy, companies with exposure to the multibillion sectors stand a fair chance of shrugging off the pitfalls of the ongoing trade wars. That’s because the industry boasts a defensive tilt that should attract investor interest amid rotation from high-risk plays in the equity markets.
“Within the equity market, we continue to recommend that investors own the health care sector, which offers investors a defensive tilt at low valuations,” Kostin added. “Health Care has outperformed the S&P 500 by 7 pp. YTD, but the median stock still trades at an 18% P/E discount to the S&P 500, which is nearly the largest valuation discount in recent decades,” Kostin said.
Increased focus on healthcare stocks amid recession and trade war concerns comes against the backdrop of one of the most frustrating years for healthcare fund managers. Even though the fundamental aspects of the healthcare sector indicated it would surpass the overall market, it still lagged behind sectors more sensitive to economic shifts as the US economy proved to be stronger than anticipated in 2024. Additionally, the sector faced negative effects due to the US election results.
Historically, healthcare has significantly outperformed over the long haul. From 1989 to October 2024, the S&P 500 Healthcare Index yielded annualized returns of 12%, comparable to the technology sector. However, performance has been cyclical, with clear phases of underperformance and outperformance, driven by overarching market trends – like instances when all defensive sectors excel – and industry-specific catalysts.
Our Methodology
We combed Greenlight Capital SEC Q4 2024 13F filings to identify the top 9 healthcare stocks in David Einhorn’s portfolio. We then analyzed why the stocks stand out, as solid investment plays, well poised to shrug off the uncertainty triggered by recession concerns and trade war. Finally, we ranked the stocks in ascending order based on the value of Greenlight Capital equity stakes in the stocks. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Top 9 Healthcare Stocks to Buy According to Billionaire David Einhorn
9. Nuvation Bio Inc. (NYSE:NUVB)
Greenlight Capital’s Equity Stakes: $93,087
Number of Hedge Fund Holders: 34
Nuvation Bio Inc. (NYSE:NUVB) is one of the smallest holdings in David Einhorn’s portfolio, offering exposure to the development of therapies for unmet medical needs. The clinical-stage biopharmaceutical company specializes in oncology therapies. Its lead product is Taletrectinib, designed to treat non-small cell lung cancer.
Taletrectinib is currently under review by the Food Drugs Administration as an advanced treatment for non-small cell lung cancer. Submission for approval is supported by positive clinical data from Phase 2 Trust -1 and Trust-II studies. Its efficacy stood at 88.8%, further heightening its prospects for approval. Taletrectinib’s clinical profile is further supported by the Chinese approval and the Japanese regulatory application.
Nuvation Bio Inc. (NYSE:NUVB) has also secured non-dilutive financing to support Taletrectinib in the US. The $250 million financing from Sagard Healthcare leaves the company in a solid financial position. In addition to Taletrectinib, Nuvation’s pipeline consists of NUV-1511 and safusidenib for IDH1-mutant glioma, affirming why it is a top healthcare stock in David Einhorn’s portfolio. These candidates, however, are still in the early stages of development and focus on regions with a large number of unmet needs.
8. Gain Therapeutics Inc (NASDAQ:GANX)
Greenlight Capital’s Equity Stakes: $1.22 Million
Number of Hedge Fund Holders: 6
Gain Therapeutics Inc (NASDAQ:GANX) is a biotechnology company that develops small-molecule therapeutics to treat diseases across various therapeutic areas. Its focus on creating a therapeutic pipeline that can treat a range of illnesses with unmet medical requirements affirms why it is one of David Einhorn’s top investment plays in the healthcare sector.
Its lead drug candidate, GT-02287, is currently in Phase 1 clinical trials for the treatment of GBA1 Parkinson’s disease. In light of promising findings from earlier research that showed GT-02287’s safety and effectiveness, the company is getting ready to treat individuals with idiopathic Parkinson’s disease or GBA1 at many clinical facilities in Australia. Gain Therapeutics Inc (NASDAQ:GANX) is hopeful about the FDA’s input on regulatory paths and expects to receive updates on patient enrollment and interim results by the middle of 2025.
Conversely, Gain Therapeutics Inc. (NASDAQ:GANX) reported a reduced net loss of $20.4 million for the year ending December 31, 2024, compared to $22.3 million in 2023. Additionally, research and development expenses declined from $11.5 million in 2023 to $10.8 million in 2024. The company is financially stable as it advances clinical trials and looks into future financing possibilities because it has enough resources to continue operations through significant milestones in 2025.
7. Acadia Healthcare Company Inc. (NASDAQ:ACHC)
Greenlight Capital’s Equity Stakes: $5.10 Million
Number of Hedge Fund Holders:46
Acadia Healthcare (NASDAQ:ACHC) is a medical care facilities company that provides behavioural healthcare services. It develops and operates acute inpatient psychiatric and specialty treatment facilities while providing outpatient behavioural healthcare services. It is one of the top healthcare stocks in David Einhorn’s portfolio as it enjoys growth momentum in its core business.
Acadia Healthcare (NASDAQ:ACHC) reported a record annual revenue of $3.2 billion for the year ending December 31, 2024, driven by strong demand for its behavioral healthcare services. Additionally, Acadia Healthcare Company is benefiting from its ability to expand its capacity to meet demand for healthcare services across the care sector. For starters, the company had its largest bed expansion in 2024.
Acadia Healthcare (NASDAQ:ACHC) unveiled three new facilities in Q4 2024 as part of its expansion plan. It also completed the construction of 1,300 new beds in 2024. Amid the expansion plan, the company exited the year with $76.3 million in cash and $226.5 million under its revolving credit facility, which it can use to accelerate its push for new growth opportunities. The authorization of a $300 million buyback program also underscores its commitment to shareholder value.
6. Coya Therapeutics, Inc. (NASDAQ:COYA)
Greenlight Capital’s Equity Stakes: $9.43 Million
Number of Hedge Fund Holders: 3
Coya Therapeutics, Inc. (NASDAQ:COYA) is a biotechnology company that develops therapies that enhance the function of regulatory T cells (Tregs) to target systemic and neuroinflammation. Its lead candidate, COYA 302, targets conditions like ALS, FTD, Parkinson’s, and Alzheimer’s. The company boasts of a scientifically sound approach to neurodegenerative illnesses with its strategic focus on neuroinflammation.
It sets itself apart from other businesses with its approach to possible combination medicines for the treatment of neurological illnesses. Additionally, it provides a more effective paradigm for therapy that may open up new possibilities for patients and provide significant value for shareholders. By combining low-dose IL-2 with CTLA4-Ig, its lead candidate, COYA-302, targets a crucial immunological mechanism in dementia, setting it apart from rivals that only target protein aggregation or single molecules.
Coya Therapeutics, Inc. (NASDAQ:COYA) has already reported positive findings from Phase 2 Alzheimer’s disease research and advancements in Frontotemporal Dementia trials. While also making great strides in initiatives related to neurodegenerative disorders with high unmet needs, Coya is steadily growing its medication pipeline. Coya’s capacity to carry out corporate, clinical, and regulatory objectives and keep adding value is reinforced by its solid scientific and clinical justification, solid cash position, and potential for new commercial development prospects.
5. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Greenlight Capital’s Equity Stakes: $10.33 Million
Number of Hedge Fund Holders: 72
Teva Pharmaceutical Industries Limited (NYSE:TEVA) develops, manufactures, and distributes generic and other medicines and biopharmaceutical products. The company specializes in providing affordable and accessible medicines to patients worldwide. It’s long-term prospects received a significant boost late last year after results from a clinical study of its candidate drug for ulcerative colitis and Crohn’s disease, Dukakitug, met primary goals.
Following the positive results, Teva Pharmaceutical Industries Limited (NYSE:TEVA) is poised to lead the commercialization of the product in Europe, Israel and other countries. The medication may be used for purposes other than inflammatory bowel disease. Duvakitug’s successful Phase 2b research results have paved the way for more clinical trials.
Despite the anticipated sharp drop in sales from its generic version of Revlimid in 2026, analysts at Piper Sandler have emphasized Duvakitug’s potential to support Teva’s expansion. The research firm has expressed its confidence in Teva’s capacity to increase its market value due to the company’s strategic efforts and the potential of its therapeutic pipeline.
Amid the positive clinical trial results, Teva Pharmaceutical Industries Limited (NYSE:TEVA) delivered solid Q4 2024 results, which were helped by double-digit sales gains of its branded drugs for migraines, Huntington’s disease, and schizophrenia. Revenue in the quarter totalled $4.2 billion as earnings per share came in at 71 cents a share. Teva expects 2025 revenue to average between $16.8 billion and $17.4 billion with diluted earnings per share of between $2.35 and $2.65.
4. Galapagos NV (NASDAQ:GLPG)
Greenlight Capital’s Equity Stakes: $13.18 Million
Number of Hedge Fund Holders: 22
Galapagos NV (NASDAQ:GLPG) is a biotechnology company that develops medicines focusing on oncology and immunology. Its primary focus is developing treatment options that improve patient outcomes through life-changing science and innovation. Its primary treatments for rheumatoid arthritis and ulcerative colitis are available in Europe, and significant sales are coming from the United States.
Galapagos NV (NASDAQ:GLPG) has made great progress in setting itself up for long-term value generation by expanding its leadership in cell therapy and meeting the high unmet medical requirements in oncology. There is significant confirmation of Galapagos’ novel, internationally scalable cell therapy technology with the FDA’s IND clearance and the impressive clinical data for the main CD19 CAR-T candidate, GLPG5101. These benefits further support the belief that GLPG5101 can improve the lives of patients with quickly progressing illnesses, especially those at risk of experiencing a rapid decline in their clinical condition.
Additionally, Galapagos NV (NASDAQ:GLPG) is currently undergoing a restructuring drive that involves amending its 10-year collaboration with Gilead. A separation slated for completion in mid-2025 should result in two publicly traded companies that will allow Galapagos to focus on advancing cell therapies targeting cancer.
3. Centene Corporation (NYSE:CNC)
Greenlight Capital’s Equity Stakes: $52.73 Million
Number of Hedge Fund Holders: 72
Centene Corporation (NYSE:CNC) is a healthcare enterprise providing programs and services to underinsured and uninsured families and commercial organizations. It is one of the top healthcare stocks in David Einhorn’s portfolio, holding steady amid growing investor confidence in defensive healthcare stocks. The stock is already up by more than 1% for the year, outperforming the S&P 500, which is on the brink of turning bearish.
The stock’s surge reflects rising confidence in its financial stability and restructuring initiatives. Centene Corporation (NYSE:CNC) has improved its core business by concentrating on Medicaid, Medicare, and ACA programs and simplifying operations. These calculated actions have given investors even more confidence in the company’s capacity for long-term success. Its premium and service revenues were up by 3% in Q4 of 2024, driven by Medicaid rate increases and membership growth in the Marketplace business.
Additionally, Centene Corporation (NYSE:CNC) is benefiting from growth in marketplace business due to strong product positioning and overall market growth. Consequently, its 2024 full year earnings per share increased by 7% to $7.17 on the back of a 12% increase in the marketplace and a 50% increase in Medicare PDP. The healthcare firm expects Q1 2025 earnings of $2.20 per share, a -2.7% year-over-year decline. It is anticipated that revenues will reach $43.47 billion, a 7.6% increase over the previous quarter.
2. Roivant Sciences Ltd. (NASDAQ:ROIV)
Greenlight Capital’s Equity Stakes: $62.36 Million
Number of Hedge Fund Holders: 44
Roivant Sciences Ltd. (NASDAQ:ROIV) is a commercial-stage biopharmaceutical company developing and commercializing medicines for inflammation and immunology. It also provides Vants a model to develop and commercialize its drugs and technologies, focusing on biopharmaceutical businesses.
Roivant Sciences Ltd. (NASDAQ:ROIV) is one of the top healthcare stocks in David Einhorn’s portfolio, making significant progress in expanding its clinical pipeline. The company has made significant progress on the development of brepocitinib for cutaneous sarcoidosis as it also works on trials for IMVT-1402 and batoclimab across multiple indications.
Roivant Sciences Ltd. (NASDAQ:ROIV) maintains a strong financial standing to progress its clinical program, supported by a cash reserve of approximately $5.2 billion as of December 31, 2024. The company plans to capitalize on its robust cash reserves to enhance innovation and expand its pipeline. It also plans to achieve several critical study outcomes throughout 2025, which could significantly influence its future growth trajectory. With a number of important trials in progress, including IMVT-1402 for Graves’ disease and rheumatoid arthritis and brepocitinib for dermatomyositis, Roivant is strategically pursuing its clinical agenda.
1. Viatris Inc. (NASDAQ:VTRS)
Greenlight Capital’s Equity Stakes: $72.02 Million
Number of Hedge Fund Holders: 48
Viatris Inc. (NASDAQ:VTRS) is a healthcare company that offers prescription brand drugs, generic drugs, complex generic drugs, and biosimilars. It also provides drugs in various categories, boasting a portfolio of more than 1,400 approved molecules. It also offers high-quality generic and branded medicines in over 165 countries, affirming its status as one of the top healthcare stocks in David Einhorn’s portfolio.
In a bid to strengthen its long-term prospects and growth metrics, Viatris Inc. (NASDAQ:VTRS) is in the process of developing a generic version of Novo Nordisk’s famous weight loss drugs, Ozempic AND Wegovy. The push is part of the company’s bid to unlock growth opportunities in the multibillion weight loss market.
Viatris Inc. (NASDAQ:VTRS) reported $14.7 billion in total revenue, $4.7 billion in adjusted EBITDA and $2 billion in free cash flow for its fiscal 2024. For 2025, the company is prioritizing capital return and expects to return between $500 million and $650 million through stock buybacks.
While we acknowledge the potential of Viatris Inc. (NASDAQ:VTRS), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than VTRS but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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