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Institutional Top Ideas Series: DAFNA Capital Management

Apr. 13, 2018 1:03 AM ETAERI, ARGX, ASND, ATRC, BPMC, IBB, IMDZ, LOXO, RIGL, SAGE, VBIV, ZGNX12 Comments

Summary

  • Today's fund in the spotlight, DAFNA Capital Management, is much smaller than previous ones we've looked at and has performed remarkably over the past few years.
  • I provide a brief overview of this fund and remind readers that we don't claim to know what management or analysts are truly thinking nor have access to their research.
  • We take a look at their top weighted positions, three newly initiated stakes, and three positions to which they are adding heavily.
  • For each stock I provide a possible one-sentence thesis and my opinion.
  • As always, each position has certain risks that readers need to be aware of and take into account as they conduct further due diligence.

In the last entry of this recently rebooted series, we took a look at top ideas from Broadfin Capital (whose performance more than doubled that of the IBB during the time frame we looked at).

Going forward, I hope to continue to delve into the portfolios of successful hedge funds predominantly in the biotech sector, trying to place ourselves in the mindset of the managers and analysts. We do so humbly, knowing that we don't have access to their research or thought processes (and keeping in mind that positions are constantly changing) - nevertheless, it is an interesting exercise that I hope readers find useful.

Today's Fund: DAFNA Capital Management

Founded: 1999

Manager: Dr. Nathan Fischel

Relevant Reading Material: Our Approach from their website (keep in mind they are a long/short fund)

Market Value: Around $185 million

Top 10 Holdings %: 43.12%

Turnover %: 29.17%

Time Held Top 20 holdings: 4.85 quarters

Performance: Around triple that of IBB during the same time frame

Figure 1: Performance compared to S&P Total Return Index (source: Whale Wisdom)

ChartIBB data by YCharts

Top 5 Weighted Positions:

#1: Loxo Oncology (LOXO) @ 13.41% of portfolio

ChartLOXO data by YCharts

Possible 1 Sentence Thesis: Their RET market opportunity could result in even further upside, they are one of the frontrunners in the targeted oncology theme (larotrectinib peak sales could top $1.5 billion) and the lucrative partnership with Bayer (OTCPK:BAYZF) refilled cash coffers to continue progressing their pipeline.

Opinion: I initially rec'd this one in the $30s, recent collaborations with Illumina (ILMN) and Vericyte are net positives and I am a big fan of the space they are operating in (we currently have a few stocks in the targeted oncology arena as part of the ROTY model account and Contenders List). Interim data from the ongoing

ChartBPMC data by YCharts

ChartATRC data by YCharts

ChartAERI data by YCharts

ChartARGX data by YCharts

ChartSAGE data by YCharts

ChartVBIV data by YCharts

ChartIMDZ data by YCharts

ChartASND data by YCharts

ChartZGNX data by YCharts

ChartRIGL data by YCharts

This article was written by

Jonathan Faison profile picture
16.79K Followers
Community of Biotech Investors Focused on Value & Clinical Momentum

Founder of 500+ member ROTY Biotech Community (try the 2-week free trial to see if it adds value for you). Quality over quantity- enjoy connecting with readers.





Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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