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Fund managers filed over 150 SC 13D/G's last week, including almost 140 in small-cap equities. These 13-D/G filings 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 venture capital firm, Quogue Capital, filed SEC form SC 13G/A on Thursday, indicating that it sold completely out of its 2.91 million share position in Infinity Pharmaceuticals (INFI) that it held at the end of 2012. Quogue is led by Wayne Rothbaum, and is focused on seed, early and mid-stage investments in the biotech industry. INFI shares have been hammered lately, down by two-thirds from their $50 highs in April. The decline accelerated after the company announced results of two phase 1 studies at the ASCO conference in early June. While both studies reported encouraging data for the lead drug in its pipeline, IPI-145, in Chronic Lymphocytic Leukemia (CLL) and in B-Cell and T-Cell lymphomas, investor reaction was decidedly negative over safety concerns. The stock has fallen another 40%-45% following the ASCO conference, and is currently trading near 52-week lows.

The negative reaction seems at least partly precipitated by the three patient deaths reported by the company in its conference call, as uncovered in the analysis by PropThink in a prior article. INFI shares were heavily sold by 79 legendary or guru fund managers in Q1/2013, prior to the recent fall. However, with shares now down almost 70% below the peak in April, less than three months ago, we believe that investor reaction to the ASCO data may be over-done. A number of brokers, including RBC Capital and Piper Jaffray would seem to agree. They came out in support of the stock shortly after the ASCO results were announced. While there are some competitive concerns about INFI's leukemia treatment relative to Gilead's product (GILD) that was also a factor in Monday's big drop, we agree with Piper's recommendation that with INFI shares now in the mid-teens, the price is now "too cheap to ignore", and would start accumulating at these levels. The company has over $300 million or $6 per share in cash and cash equivalents, and besides testing IPI-145 in multiple indications, the company has other compounds in the pipeline, including IPI-443 for inflammation and IPI-504 for non-small cell lung cancer (NSCLC). Overall, of the ten analysts that cover INFI, seven rate it at buy or strong buy, and the remaining three rate it at hold, with a median target of $38, well above current prices in the mid-teens.


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Besides INFI, the following are additional institutional 13-D/G filings in small-cap stocks last week (see table above):

  • Acura Pharmaceuticals (ACUR), that develops pharmaceuticals that effectively relieve pain while also discouraging common methods of opioid abuse, utilizing its proprietary Aversion and Impede technologies, in which Princeton, NJ-based Life sciences venture capital firm, Care Capital, with approximately $500 million in capital, filed SEC form SC 13D/A on Monday, indicating that it cut 0.81 million shares from the 6.61 million share position that it reported holding at the end of 2012, in an earlier filing.
  • Clean Energy Fuels Corp. (CLNE), founded by famed energy investor and hedge fund manager Boone Pickens, provides natural gas as an alternative fuel to vehicle fleets in the U.S. and Canada, including customers in the refuse, transit, shuttle, taxi, intrastate and interstate trucking, airport and municipal fleet markets, in which leading private equity firm, Leonard Green & Partners LP, with $15 billion in capital, filed SEC form SC 13G on Monday indicating that it holds a new 5.38 million share position in the company.
  • YY Inc. (YY), a Chinese provider of online social communications platform offering real-time voice, text, and video features via YY.com, in which Hong-Kong based greater China-focused hedge fund Keywise Capital Management, filed SEC form SC 13G on Monday indicating that it added a new 640,000 share position, convertible into 12.8 million or 7.1% of outstanding shares.
  • Rite Aid Corp. (RAD), that operates approximately 4,600 retail drugstores in 31 states and the District of Columbia, with a strong presence on both the East and West coasts, offering prescription drugs, convenience products and cosmetics, in which Quebec-based drugstore chain Jean Coutu Group filed SEC form SC 13D/A on Friday, indicating that it holds 65.4 million shares, down 40.5 million shares from the 105.9 million shares that it reported in an earlier filing in April.

Disclosure:

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Small-Cap Picks From Last Week's 13D/G 5% Ownership Fund Manager Filings