Many leading fund managers, including Wellington Management, SAC Capital Advisors and T Rowe Price Associates, filed forms 13-D and 13-G with the SEC recently, indicating that they had amended their ownership in U.S. exchange traded healthcare companies.
The 13-D/G reports are statements of significant ownership of more than 5% of the voting class of a company's securities, and they are also important due to their timeliness. While 13-F filings are quarterly, and are required to be reported within 45 days after the end of the quarter, 13-D/G's are required to be filed within ten days of the underlying transaction. Furthermore, 13-D/G's are often a precursor to a hostile takeover, company breakup or other "change of control" events, and will often include a letter to management explaining the reason for their taking a large stake in the company, thereby giving more insight into the transaction.
New York-based hedge fund Glenview Capital Management, headed by legendary manager Larry Robbins, and with $7.1 billion in 13-F assets, filed SEC form SC 13D on Monday indicating that it holds 37.76 million shares of Health Management Association (HMA), adding 2.70 million shares to the 35.06 million shares that it reported holding at the end of Q4/2012. HMA is a favorite among the 300+ leading funds that we generate consensus picks data for on our website. Together, the 300+ leading funds added 10.99 million shares in the latest available Q4/2012 to their 133.38 million share prior quarter position in the company, giving it an overall GFPRank® of 4.2. GFPRank® is a proprietary and relative ranking system that numerically represents on a scale of 1 to 5 the attractiveness of the stock to leading fund managers based on their holdings, change in holdings, percent of outstanding shares and number of leading funds in the stock, as compared to the rest of the 5,200+ stocks in our database.
Among leading funds, the 22 healthcare sector-focused funds included in our database together are also bullish on the stock, adding 4.21 million net new shares in Q4/2012 to its 3.80 million share prior quarter position, giving it a SectorRank® of 5.0. Also, the 79 legendary or guru fund managers in our database together are also bullish on the stock, adding 15.90 million net new shares in Q4/2012 to their 27.34 million share prior quarter position, giving it a GuruRank® of 4.9. Also, subsequent to the end of Q4, leading funds have filed SEC forms SC 13D/G's indicating that they accumulated an additional 2.37 million net new shares since the end of Q4/2012.
Naples, FL-based Health Management Association is an operator of general acute care hospitals and other healthcare facilities, primarily in non-urban communities in the southern U.S. It offers a wide variety of healthcare services, including surgery, emergency room care, internal medicine, oncology, radiology, and outpatient services such as lab and x-ray work, and physical therapy. In its latest Q1 issued last Thursday, the company reported 13c in earnings, beating street estimates of 11c. The stock has rallied more than 70% in the past year, and currently trades near multi-year highs. At its closing price of $11.23 on Wednesday, it traded at 11 forward P/E compared to the 14.0 average for its peers in the hospitals group, while earnings are projected to rise from 75c in FY 2012 to $1.02 in FY 2014. Of the 25 analysts that cover the company, eleven rate it at buy/strong buy, twelve rate it hold, and one each rates it at underperform and sell.
With support from guru and healthcare sector-focused fund managers, HMA is trading at a discount to its peer group, while earnings growth is projected to be strong going forward. The company, along with its peers in the hospital group, is also expected to benefit from healthcare reform starting next year. At current prices, the stock has already pulled back from the rally earlier this year, and is an attractive buy at current levels.
Besides HMA, the following are additional institutional 13-D/G filings last month in the healthcare sector (see table above):
- Amgen Inc. (AMGN), that develops therapeutics based on cellular and molecular biology to treat anemia, cancer, and inflammatory diseases, in which Pasadena, CA-based PRIMECAP Management Company, that manages over $60 billion in three PRIMECAP Odyssey Funds, and for a limited number of institutional clients, filed SEC form SC 13G/A last Friday indicating that it holds 37.46 million shares, cutting 4.58 million shares from the 42.04 million shares that it reported holding at the end of Q4/2012.
- Intermune Inc. (ITMN), a development-stage biotech company engaged in the development and commercialization of therapies in the areas of pulmonology and fibrotic diseases, in which Visium Asset Management filed SEC form SC 13G on April 22nd indicating that it held 5.44 million shares, a new position since it last reported its holdings at the end of Q4/2012.
- Infinity Pharmaceuticals (INFI), an innovative cancer drug discovery and development company, in which Jersey, Channel Islands-based Beacon Co. filed SEC form SC 13D/A on April 16th indicating that it held no position in the company, cutting out completely the 5.71 million share position that it reported holding earlier on April 12th. Also, on April 16th, billionaire star fund manager Stephen Cohen's hedge fund SAC Capital Advisors, with over $15.0 billion in 13-F assets, filed SEC form SC 13G indicating that it held 2.41 million shares, a new position since it reported for its latest Q4/2012.
- Santarus Inc. (SNTS), a development-stage biotech company focused on acquiring, developing and commercializing proprietary products addressing diabetes, high cholesterol, ulcerative colitis, travelers diarrhea and other diseases, in which healthcare-focused hedge fund Visium Asset Management filed SEC form SC 13G on April 12th indicating that it held 3.83 million shares, adding 2.29 million shares to the 1.54 million shares it reported holding at the end of Q4/2012.
- Ariad Pharmaceuticals Inc. (ARIA), that is engaged in the development of drugs that treat aggressive and advanced-stage cancer by regulating cell signaling with small molecules, in which BlackRock, the world's largest institutional manager with $3.6 Trillion under management, filed SEC form SC 13G/A on April 10th indicating that it held 7.84 million shares, cutting 1.73 million shares from the 9.57 million shares it reported holding at the end of Q1/2013.
- Arena Pharmaceuticals (ARNA), that is a biotech developer of oral drugs for cardiovascular, central nervous system, inflammatory, and metabolic diseases, in which one of the world's largest or mega fund managers Wellington Management, with $273 billion in 13-F assets, filed SEC form SC 13G/A on April 10th indicating that it held 22.27 million shares, adding 4.02 million shares to the 18.25 million shares it reported holding at the end of Q4/2012.
- Keryx Biopharmaceuticals (KERX), a developer of novel pharmaceutical products to treat cancer, renal disease and other life-threatening diseases, in which BlackRock filed SEC form SC 13G/A indicating that it held 8.56 million shares, adding 0.05 million shares to the 8.51 million shares that it reported holding at the end of Q1/2013.
- Pharmacyclics Inc. (PCYC), a development stage biotech company that is focused on discovering and developing innovative small-molecule drugs for the treatment of cancer and immune mediated diseases, in which one of the world's largest managers T Rowe Price Associates, with $340 billion in 13-F assets, filed SEC form SC 13G/A on April 10th indicating that it holds 7.31 million shares, adding 1.91 million shares to the 5.40 million shares that it reported holding at the end of Q4/2012.
- Vivus Inc. (VVUS), that develops innovative therapies to treat obesity, diabetes, and sexual health, in which New York-based investment management company First Manhattan Co., headed by David Gottesman, and with over $12.5 billion in 13-F assets, filed multiple SEC forms SC 13D/A, the last of which was filed on April 26th, indicating that it holds 9.20 million shares, adding 0.72 million shares to the 8.48 million shares that it reported holding at the end of Q1/2013.
- Warner Chilcott Plc (WCRX), that is a leading specialty pharmaceutical developer of branded prescription drugs for women's healthcare, gastroenterology, dermatology and urology segments of the North American and Western European pharmaceuticals markets, in which Fidelity Investments filed SEC form SC 13G on April 10th indicating that it held 25.11 million shares, adding 14.93 million shares to the 10.18 million shares that it reported holding at the end of Q4/2012.
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