Many leading funds, including SAC Capital, MFS and GAMCO, filed forms 13-D and 13-G (and form 4) with the SEC on in the past week-and-a-half (April 25th to May 4th, 2012), indicating that they had amended their ownership in U.S. traded public companies. The following are the most notable institutional trades based on our analysis of those filings (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):
Vivus Inc. (VVUS): VVUS is a biopharmaceutical company developing therapeutic products to address unmet medical needs in obesity, diabetes and sexual health. On Thursday, Bermuda-based Meditor Group filed SEC Form SC 13G/A stating that it holds 4.6 million or 4.7% of outstanding shares, a decrease from the 6.2 million shares it reported holding in an earlier filing in March, but higher than the 0.9 million shares it reported holding at the end of Q4 2011.
VVUS at the end of April, on the 27th, received FDA approval for Avanafil, its new drug treatment for erectile dysfunction or ED. The stock has more than doubled YTD, and received a minor temporary boost from the FDA approval, and continues to form a tight consolidation base at its all-time highs, as the company waits on the FDA decision over its weight-loss drug Qnexa that was recently pushed back three months to July 17th. Analysts meanwhile have been extremely positive on the stock, making upbeat statements and raising ratings and/or price targets. Perhaps the most optimistic statements have come from Rodman & Renshaw that upgraded the stock and raised its price target to $39, estimating Qnexa sales in 2020 at $3 billion in the U.S. and $1.8 billion overseas. Besides Rodman, the bevy of analysts joining the party included JPMorgan, JMP Securities and Cowen, all of whom raised their price targets to the $40-$45 range.
Ariad Pharmaceuticals Inc. (ARIA): ARIA is engaged in the development of drugs that treat aggressive and advanced-stage cancer by regulating cell signaling with small molecules. It is also developing small-molecule drugs that block signal transduction pathways in cells responsible for osteoporosis and immune and inflammatory diseases. The week before last, on Friday, billionaire star fund manager Stephen Cohen's hedge fund SAC Capital Advisors, with over $15.7 billion in 13-F assets, filed SEC Form SC 13G indicating that it holds 7.9 million or 4.9% of outstanding shares, an increase from the 2.6 million shares it reported holding at the end of Q4 in its most recent 13-F filing, placing it just behind mutual fund powerhouse Fidelity Investments (23.1 million shares) and Montreal-based Swiss and Canadian healthcare-focused investment firm Sectoral Asset Management (9.0 million shares).
ARIA shares are currently consolidating in a tight 15%-18% base near its all-time highs after a steep 100% run-up from October of last year, bolstered by recent broker upgrades based on the potential of its ponatinib treatment and other drugs in its pipeline. The company recently received negative news two weeks ago that the Oncologic Drugs Advisory Committee voted against recommending Taltorvic (ridaforolimus) for the treatment of adult and pediatric patients with metastatic soft tissue sarcoma or bone sarcoma. However, investors seem to have taken the cue to buy on the weakness, focusing instead on the potential of ponatinib, as shares are back to new highs after a brief 16% retreat from the negative Taltorvic news. The company plans for a marketing approval submission in the U.S. and Europe of ponatinib for Q3 of 2012. It seems based on the actions of SAC Capital that at least one guru investor shares this sentiment, boldly and aggressively adding it to his portfolio as the stock ascends to all-time highs.
Amylin Pharmaceuticals (AMLN): AMLN develops drugs for the treatment of diabetes, obesity and other diseases. The week before last, on Wednesday, well-known financier, corporate raider and "activist" hedge fund manager Carl Ichan's eponymous fund filed SEC Form SC 13D/A indicating that it had voluntarily dismissed its lawsuit against the company after discussions with its CEO Daniel Bradbury, while also stating that he continued to believe that the company should be sold at this time. Mr. Icahn owns 14.4 million or 8.9% of outstanding shares of AMLN, that were acquired in Q4 of 2011, and has already bagged a 150% return on his investment. He is currently the third largest institutional holder of AMLN shares, behind Fidelity Investments (21.9 million shares) and mega fund Wellington Management (19.9 million shares).
AMLN shares are already up huge this year, up about 120% YTD, based on speculation that the firm will be taken-out at a premium, by those interested in getting access to its valuable BYETTA/BYDUREON diabetes portfolio. The company has reportedly hired bankers and is actively looking to sell itself, with interested bidders being French pharmaceutical giant Sanofi (SNY), Merck & Co. (MRK) and U.K.-based AstraZeneca Plc (AZN). The biggest surge in AMLN shares occurred at the end of March after news broke that the company rejected a $3.5 billion unsolicited bid from Bristol-Myers Squib (BMY), a move that effectively put a $22 floor under the stock.
Other major institutional filings in the past week-and-a-half in the healthcare sector included:
- Amarin Corp. (AMRN), that is a clinical stage Ireland-based global pharmaceutical group which develops novel drugs for the treatment of cardiovascular diseases using its proprietary advanced oral and trans-dermal drug delivery technologies, in which London-based healthcare focused international investment group Abingworth LLP filed SEC Form SC 13D/A indicating that it holds 10.1 million or 7.0% of outstanding shares, a decrease from the 14.2 million shares it indicated holding in an earlier filing last month, and also an increase from the 7.9 million shares it held at the end of Q4 2011;
- St. Jude Medical (STJ), that develops cardiovascular medical devices for cardiac rhythm management, atrial fibrillation, cardiac surgery, cardiology and neuromodulation, in which Boston-based MFS Investment Management, with over $265 billion in assets under management, filed SEC Form SC 13G/A indicating that it holds 32.4 million or 10.3% of outstanding shares, an increase from the 24.6 million shares it reported holding at the end of Q4 2011; and
- Ardea Biosciences Inc. (RDEA), a clinical-stage biotech company focused on the discovery and development of small-molecule therapeutics for the treatment of gout and cancer in the U.S., currently in a definitive agreement to be acquired by Astrazeneca Plc, in which New York-based GAMCO Investors, headed by award winning money manager Mario Gabelli, and with $12.6 billion in 13-F assets at the end of Q4, filed SEC Forms SC 13D/A indicating that it holds 2.9 million shares, a new position for it since the end of Q4 2011.
Form 13-D is commonly referred to as "beneficial ownership report," and is required when a person or a group of persons acquires beneficial ownership of more than 5% of the voting class of a company's equity securities; form 13-G is the abbreviated version of the form that is allowed under certain circumstances.
The information in forms 13-D and 13-G is extremely timely as it is required to be filed within 10 days after the purchase, in contrast to 13-F quarterly filings by Institutions that are filed every three months. The information contained in 13-F filings, thereby, can as much as 18 weeks old by the time it is disseminated to the public. Furthermore, by virtue of their 5% ownership in public companies, the information contained in the 13-D and 13-G filings indicates only high confidence or high conviction moves by institutions and insiders, and hence can be interpreted to be of greater relevance to the investment community than the 13-F quarterly filings. Furthermore, 13-D and 13-G filings often are a precursor to hostile takeover, company breakups and other "change of control" events, and often they will include a letter to management explaining the reason for their taking a large stake in the company.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.