3 Biotech Stocks Backed By Big Money

M&A in the healthcare sector is at record levels and big pharmaceutical companies are buying smaller biotech companies almost on a weekly basis.

For example, last week Merck acquired the biotech stock Idenix Pharmaceuticals for a 229 percent premium. That’s great, especially if you owned the stock.

Well, did you know that billionaire and top hedge fund manager Seth Klarman made over $1 billion on his investment in Idenix, in one day? Yeah, Klarman DID own the stock. He actually owned 35.4 percent of Idenix.

Stocks that are controlled or owned by big time investors and hedge funds can have a built-in catalyst. The investor or hedge fund is usually working behind the scenes to help the company sell itself.

Must be nice, eh?

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Here are three stocks have the potential to be acquired for a huge premium, and a top hedge fund or wealthy investor heavily owns each.

The best part is that each of these is under $7.00.

Aveo Pharmaceuticals AVEO: Owned by the same Seth Klarman who owned Idenix, and that stock was acquired for a 230 percent premium this week.

Could lightning strike twice?

Synta Pharmaceuticals SNTA: The hedge fund manager Bruce Kovner, and his hedge fund Caxton, own more than 30 percent of Synta.  More importantly, they have recently been buying more of the stock. Well, if Bruce is buying more . . .

Ariad Pharmaceuticals ARIA: ARIA is owned by one of the best emerging biotech hedge funds, Sarissa Capital Management.

Alex Denner - the former head of healthcare investments for Carl Icahn, runs Sarissa. Sarissa owns almost seven percent of Ariad.

There are obviously no guarantees in the stock market world, but it certainly can’t hurt to follow the big money, and the big money is definitely behind these three companies.