In this article we present the list of top 10 biotech stocks hedge funds are most bullish about. The list is based on the 13F filings of more than 300 hedge funds and a few mutual funds with stellar reputation. We follow hedge fund managers because they're the smartest investors around. They leave less to chance than do most investors. They go to great lengths to get an “edge” over ordinary investors.
Hedge fund managers also have the resources to do extensive research on public companies and they have access to experts who can guide them. We believe we are more likely to beat the market by imitating insiders and hedge funds than trading against them.
Here are the top 10 biotech stocks that hedge funds are buying like crazy:
- Gilead Sciences (GILD): More hedge funds - in fact, 35 - owned Gilead at the end of June than any other biotech stock. Gilead fared pretty well over the past year, returning 20%, beating the S&P's 14% return. Lee Ainslie's Maverick Capital has nearly 3.3 million shares, a position that was unchanged in Q2.
- Cephalon (CEPH): Cephalon was owned by 32 hedge funds at the end of last quarter. CEPH has performed pretty well over the past 52 weeks, crushing the S&P by returning 35%. Most of the funds owned CEPH’s convertible notes. At the end of last quarter, Jim Simons' Renaissance Technologies had about 760,000 shares. That's after a more than 800% position increase in Q2.
- Amgen (AMGN): Amgen was in 30 hedge funds' portfolios in Q2. The company didn't beat the S&P, returning 6% over the past year. Cliff Asness's AQR Capital Management increased its position in AMGN last quarter by 17%, making the firm's position at the end of June about 1.1 million shares.
- Life Technologies (LIFE): Life Technologies was owned by 28 hedge funds at the end of June. The company lost nearly 7% over the past 52 weeks. Larry Robbins' Glenview Capital increased its position by 42% last quarter, making its interest at the end of Q2 nearly 13 million shares.
- Biogen Idec (BIIB): Biogen most certainly made a few hedge fund managers happy. It was owned by 23 hedge funds in Q2, and the company did not disappoint. BIIB returned a whopping 71% over the past year. Andreas Halvorsen's Viking Capital has the largest position among the more than 350 hedge funds we follow. It's a position that Viking initiated last quarter, at 1.4 million shares.
- Illumina (ILMN): Illumina was in 23 hedge funds' portfolios last quarter. The company made a decent return of 16% over the past 52 weeks, beating the S&P in the same time period. Most of the funds that have the larger positions in ILMN decreased its interest last quarter. But Jim Simons' Renaissance Technologies increased its holdings by 15%, giving them a total of a little more than 850K shares.
- Medicis Pharmaceutical (MRX): Medicis was owned by 22 hedge funds in Q2. The company beat the S&P, returning 33% over the past year. Anand Parekh's Alyeska Investment Group more than doubled its position last quarter, giving them exactly 850K shares.
- Charles River Pharmaceutical (CRL): CRL didn't go in the negative, but it didn't beat the S&P over the past 52 weeks, returning 11%. It was in 21 hedge funds' portfolios last quarter. Barry Rosenstein's Jana Partners is one of the top holders of this stock, although it decreased its position by 7% last quarter. Jana had a little over 4 million shares of CRL at the end of June.
- Dendreon (DNDN): Dendreon was also in 21 hedge funds' portfolios, but it was a major disappointment. DNDN lost 70% of its value over the past year. Steve Cohen's SAC Capital Advisors increased its position slightly last quarter, giving them a total of 8.6 million shares.
- NPS Pharmaceuticals (NPSP): NPSP made a decent return over the past week, although coming in lower than the S&P. NPSP returned 12% over the past year, compared to the S&P's 14%. The company was in 20 hedge funds' portfolios over this past year. Jacob Gottlieb's Visium Asset Management more than doubled down last quarter. It increased its position by 160%. The firm now has just over a million shares of NPSP.