Dr. Phillip Frost, CEO and Chairman of Opko Health (NYSEMKT:OPK), has been steadily increasing his stake in the healthcare company this past month, purchasing hundreds of thousands of shares through Frost Gamma Investments Trust while the stock price dropped 12% to a year-to-date low just under $4.30.
Since July 6th, Frost has bought more than 800,000 shares of the biotechnology company. In his most recent transaction on July 27th, the billionaire purchased 185,000 shares for $801,104 at an average price $4.34, bumping his stake from 39.58% to 39.65%.
Frost, who became CEO and chairman in 2007, now holds 114,192,354 shares of the company
A self-made billionaire, Frost has been causing quite a stir over the potential of Opko. Supporters argue that Frost would not be a billionaire if he was a poor investor, and that Frost's impressive investment track record should be considered seriously when evaluating the company. They underscore that some of Frost's most successful investments, such as Key Pharmaceuticals and Ivax, have gained thousands of percentage points, and far outweigh his past investment blunders. Still, critics contend that too much of Opko's valuation is based on the presence of Frost, and that the billionaire's mishaps, such as his past investment in the fraudulent Chinese company SearchMedia Holdings, could easily be repeated with Opko.
Frost aside, bullish analysts point to Opko's growing revenue and promising product line for justification of Opko's potential. However, the 10% drop in the stock price during last 3 months may prove harder to defend. Although Frost will likely continue to increase his stake in Opko, following his lead will remain uncertain.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.