Visium Asset Management Is a Staunch Supporter of These 5 Healthcare Stocks

Jacob Gottlieb’s Visium Asset Management recently filed its latest 13F with the Securities and Exchange Commission for the reporting period of September 30. Visium was founded by Gottlieb about ten years ago and the fund today manages a public equity portfolio valued at $7.3 billion, which is primarily invested in healthcare stocks. Besides healthcare stocks, which accounted for 54% of the fund’s portfolio, it also holds notable stakes in technology and financial stocks. Given the turbulence in the healthcare sector during the third quarter, we turn to Visium’s top five picks, all of which are healthcare stocks, to shed some light on stocks that the industry veteran believes will make some noise coming out of the healthcare downturn.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

#5 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

– Shares held (as of September 30): 1.03 million

– Total Value (as of September 30): $184.08 million

Visium added 200,525 more shares to its holding of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), the specialty pharmaceutical and medical device company based in Canada, which was at the center of the healthcare swoon during the third quarter. More recently, Valeant is considering the sale of its specialty contact lens manufacturing division, Paragon Vision Sciences, Reuters reported on Monday, citing two people familiar with the matter. The FTC has been investigating Valeant for potentially cornering a portion of the contact lens market. Shares of the company have lost 34.41% year-to-date and hedge funds lost some of their enthusiasm for the stock in the third quarter, as the total number of funds in our database that held stakes in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) dropped by ten quarter-over-quarter to 88. Among those still-optimistic investors is Bill Ackman’s Pershing Square, which held 19.47 million shares at the end of the third quarter.

#4 Allergan plc Ordinary Shares (NYSE:AGN)

– Shares held (as of September 30): 997,201

– Total Value (as of September 30): $271.05 million

Allergan PLC (NYSE:AGN) is a new position for Visium, initiated during the third quarter. Pfizer Inc. (NYSE:PFE) and Allergan last month announced an agreement under which Pfizer will combine with Allergan in a stock transaction currently valued at $363.63 per Allergan share, for a total enterprise value of about $160 billion. Allergan shareholders will receive 11.3 shares of the combined company for each Allergan share, while Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares. The combined company is expected to maintain Allergan’s Irish legal domicile, with global operational headquarters in New York. The transaction is likely to be completed in the second half of 2016. Allergan PLC (NYSE:AGN)’s shares have gained 20.61% year-to-date. Arthur B. Cohen and Joseph Healey‘s HealthCor Management held 475,000 Allergan shares worth $129.11 million at the end of September.

On the next page, we’ll cover the top three top stock picks of Visium.

#3 Perrigo Company plc Ordinary Shares(NYSE:PRGO)

– Shares held (as of September 30): 1.80 million

– Total Value (as of September 30): $283.72 million

Visium cut its position in the $21.57-billion specialty pharmaceutical company by 287,385 shares during the third quarter. Perrigo Company plc (NYSE:PRGO) posted strong financial results for the third quarter, with income increasing to $112.6 million compared to $96.3 million a year ago. The company’s sales were also strong, rising by 41% year-over-year to $1.34 billion. Despite its improved financial performance, the company’s stock has lost 11.23% year-to-date. We saw a drop in hedge fund interest in Perrigo Company plc (NYSE:PRGO) during the third quarter as well, as a total of 63 funds that we track held the stock in their portfolios, representing a quarter-over-quarter decrease of 20 investors. Daniel S. Och’s OZ Management holds 3.53 million Perrigo shares as of the end of September.

#2 Laboratory Corp. of America Holdings (NYSE:LH)

– Shares held (as of September 30): 3.02 million

– Total Value (as of September 30): $327.47 million

Visium reduced its position in Laboratory Corp. of America Holdings (NYSE:LH) by 354,646 shares during the third quarter. Recently, Laboratory Corp. of America acquired Safe Foods International Holdings, as well as its two operating companies, International Food Network and The National Food Laboratory. Terms of the deal were not disclosed. Laboratory Corp. reported solid financial results for the third quarter, with the company’s earnings increasing to $152.8 million, or $1.49 per share, versus $137.2 million, or $1.59 per share, a year earlier. Its quarterly revenue rose to $2.27 billion compared to $1.55 billion a year ago. Laboratory Corp. of America Holdings (NYSE:LH)’s stock has increased by nearly 14% year-to-date. Another investor betting big on the stock is Andreas Halvorsen’s Viking Global, which held 5.05 million Laboratory Corp. shares at the end of September.

#1 Endo International plc – Ordinary Shares (NASDAQ:ENDP)

– Shares held (as of September 30): 5.21 million

– Total Value (as of September 30): $360.53 million

Endo International plc (NASDAQ:ENDP) ranks as Visium’s top holding and the investment firm increased its position in the company by 1.49 million shares in the third quarter. Endo International is a global specialty healthcare company whose shares have dropped by 19.74% year-to-date. For the third quarter, Endo International posted a loss from continuing operations of $804 million, compared to income of $49 million a year ago. A total of 61 hedge funds tracked by Insider Monkey reported holding a stake in the company as of the end of September, versus 67 funds three months prior to that. OZ Management held 10.12 million Endo International plc (NASDAQ:ENDP) shares on September 30.

Disclosure: None