How Gilead And Johnson & Johnson's Tumble Could've Burned These Hedge Funds
After a pretty good year, Gilead Sciences, Inc. (NASDAQ: GILD) is down significantly since the start of the week.
The tumble was set in motion after Express Scripts Holding Company (NASDAQ: ESRX), the largest pharmacy benefits manager in the United States, selected AbbVie Inc (NYSE: ABBV) over Gilead and Johnson & Johnson (NYSE: JNJ) for its Hepatitis C drug.
Below is a closer look at a few hedge funds that could be taking a big hit as Gilead and peers fall this week, using third quarter 13F filings.
At the end of Q3, Egerton Capital was the largest hedge fund investor of record in Gilead, holding 5.69 million shares. Since December 19, the fund’s position could have lost more than $100 million in market value, and is likely now worth slightly more than half of a billion dollars.
Despite the big loss, Bank of America analysts seem to believe that there is some downside left. The research firm downgraded Gilead from Buy to Underperform on Monday and trimmed its price target from $130 to $87.
Gilead recently traded around $92.55, up 3.5 from Tuesday's close.
Healthcare-oriented fund Orbimed Advisors also appears to have taken a big blow as its largest bet is placed on Gilead. At the end of Q3 2014, the fund disclosed ownership of 3.76 million shares. These shares lost about $65 million in value between December 19 and December 23.
Orbimed’s second-largest stake is placed in Biogen Idec Inc (NASDAQ: BIIB), another biotech company that’s been losing ground this week.
Biogen fell more than 6 percent on Tuesday. The fund’s 1.19 million share position appears to have lost about $28 million in value since December 19, magnifying the impact of Gilead’s fall for Orbimed.
Adage Capital Management And AQR Capital Management
Although Johnson & Johnson did not take a blow as big as Gilead, its stock also plummeted more than 2 percent on Tuesday.
Adage and AQR are two funds that had big investments in both Gilead and Johnson & Johnson at the end of last quarter, and thus, may have felt the impact of the Hepatitis C news.
Adage reported owning 2.96 million shares of Johnson & Johnson and 3 million shares of Gilead, while AQR holds 3.49 million and 2.26 million, respectively.
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