5 Biotech Stocks That Could Double
Billionaires Portfolio: This week the biotech stock Idenix Pharmaceuticals Inc (NASDAQ:IDIX) was acquired by Merck for a 229% premium. That’s one of the biggest one day moves ever, for a stock listed on the New York Stock Exchange. Billionaire and top hedge fund manager Seth Klarman, of the Baupost Group, made over $1 billion on his investment in Idenix, in one day.
Klarman owned 35.4% of Idenix (almost 54 million shares). He paid around $300 million for his original stake, which is now worth $1.3 billion.
This happened for two reasons: 1) M&A in the healthcare sector is at record levels. Big pharmaceutical companies are buying smaller biotechs almost on a weekly basis. 2) Stocks that are controlled or owned by the world’s best billionaire investors and hedge funds, like Idenix have a built in catalyst. The billionaire investor or hedge fund is usually working behind the scenes to help the company sell itself.
That’s just what Seth Klarman did with Idenix.
Now, the great thing about takeovers is that they can occur in any market condition, bear or bull. You don’t need a hot stock market to make money as in investor in takeover candidates.
For periods where stocks are reaching fair valuations, this is a particularly good time to focus on potential takeovers.
With that, below is our Five Healthcare Stocks Primed for a Takeover. We think all of these stocks have the potential to be acquired for a 100% premium or more, and each are heavily owned by a top hedge fund or billionaire investor.
1) Aveo Pharmaceuticals (NASDAQ:AVEO) – Aveo is the classic asymmetric investment. It has huge upside potential with very little downside risk. The company has $1.71 in cash per share and sells for just $1.20 per share. That means the company has more cash on its balance sheet than its entire market capitalization. In addition, it’s owned by the same billionaire investor, Seth Klarman, who owned Idenix — the stock that was acquired for a 230% premium this week.
2) Synta Pharmaceuticals (NASDAQ:SNTA) – The billionaire hedge fund manager Bruce Kovner, and his hedge fund Caxton, own more than 30% of Synta. They have recently been buying more of the stock.
3) AcelRX Pharmaceuticals (NASDAQ:ACRX) – Perceptive Advisors is not only one of the top performing biotech hedge funds in the world, but it is one of the best hedge funds on the planet. Perceptive is a billion dollar plus hedge fund run by Joseph Edelman and has returned an incredible 42% annualized since 1999. If you would have invested $10,000 in Perceptive in 1999, you would now have an incredible $1.3 million dollars! They own more than 15% of ACRX.
4) Ariad Pharmaceuticals (NASDAQ:ARIA)- ARIA is owned by one of the best emerging biotech hedge funds, Sarissa Capital Management. Sarissa is run by Alex Denner, a Yale PdD and the former head of healthcare investments for Carl Icahn. Sarissa owns almost 7% of Ariad.
5) Infinity Pharmaceuticals (NYSE:INFY)- INFY is owned by one of the best and longest running healthcare focused hedge fund, Orbimed Advisors. Orbimed runs over $10 billion dollars. Its run by the Princeton educated Samuel Isaly, and has returned 25% annualized since inception. Orbimed owns almost 10% of Infinity Pharmaceuticals.
Please don’t miss the opportunity to learn more about me and how we follow Billionaire Investors into stocks by visiting the Billionaires Portfolio.
The insider behind the Billionaire’s Portfolio is William Meade. William started his career with Wood Asset Management. Wood Asset Management was a $1.5 billion dollar institutional asset management firm and hedge fund, founded by Gary Wood, a former Goldman Sachs Partner and Harvard MBA. At Wood, William helped manage equity and fixed income portfolios for major university endowments, Fortune 500 pension funds and super high net worth clients (including 2 billionaire families).
Next, William was Director of ETF and Mutual Fund Research for Zacks Investment Research in Chicago. At Zacks, he worked with the founder Len Zacks, a PHD from MIT, in developing and maintaining a proprietary model that ranked over 20,000 ETFs and mutual funds. This model was viewed and used by over 150,000 people monthly, and was published in US News and World Report, and featured on CNN, Yahoo Finance, and Fortune.com.
William received a Masters in Economics from Johns Hopkins University, including PhD level coursework in International Economics. At Johns Hopkins, Mr. Meade was taught by Economists from The Federal Reserve and Department of Treasury. While at Johns Hopkins Mr.Meade consulted for a top hedge fund in Washington DC.