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5 Healthcare Stocks the Experts at Aquilo Capital Management Are Buying (1 Has Gained 88% This Month)

Tim Frederick
·5 min read

Marc Schneidman’s Aquilo Capital Management is a San Francisco-based, healthcare-focused long/short hedge fund that was founded in 2010. The fund uses CIO Schneidman’s 20 years of industry expertise in biotech research and investments, which included 15 years working at Mark Lampert’s Biotechnology Value Fund, to seek out mispriced small-cap companies in the biotech sector. The fund’s assets under management surpassed $500 million as of August 2020.

Aquilo Capital Management’s Global Biotech Long/Short Equity Fund has enjoyed a successful run since inception, with compound annual returns of 14.06% through the first quarter of 2020. The fund’s performance has careened about wildly in recent years, with odd-number years since 2015 having returns no worse than 28.98%, while even-number years haven’t returned more than 3.16%.

We’ll look at five of the fund’s favorite healthcare stocks below, all of which it bought shares of during the second quarter of this year.

Countries With Highest Medical Research Spending
Countries With Highest Medical Research Spending

Nestor Rizhniak/Shutterstock.com

5 Stocks Bought by Aquilo Capital Management in Q2

Dicerna Pharmaceuticals

Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is Aquilo Capital Management’s favorite health stock after the fund bumped up the size of its DRNA position by 18%, knocking Uniqure NV out of that position, which it had held for two quarters. While Aquilo may have been the most bullish on Dicerna at the end of Q2, allocating the largest percentage of its 13F portfolio to the stock among the hedge funds tracked by Insider Monkey, it finds itself in a growing group of Dicerna-owning hedge funds, which have doubled in the last year.

Dicerna Pharmaceuticals’ GalXC technology platform can be used to create molecules that disrupt and essentially turn off dangerous gene sequences that have been implicated in various diseases through a process call RNA Interference. Dicerna currently has more than 15 programs in various stages of development, including three liver-related treatments that are undergoing clinical trials.

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AnaptysBio, Inc.

Aquilo Capital was later to the party on AnaptysBio, Inc. (NASDAQ:ANAB), buying into the biotech company in the first quarter of 2020, several months after a surge in hedge fund ownership of the stock. Aquilo grew its ANAB position by a further 11% in Q2, setting it up for a big score when the stock became a rousing success in October, a month during which ANAB shares have gained 88%. Positive results from AnaptysBio’s small phase 2 study of imsidolimab were announced on October 13, which excited investors. The treatment for generalized pustular psoriasis would be the first approved for market.

Uniqure

Uniqure NV (NASDAQ:QURE) has rapidly become one of the most popular small-cap stocks among hedge funds and Aquilo Capital can lay claim to being its biggest fan, allocating over 6% of its 13F portfolio’s value to the stock. 49 of the hedge funds tracked by Insider Monkey were long QURE in the middle of 2020, a greater than 150% increase over the past 18 months and an impressive level of hedge fund support for a company with a mere $1.92 billion market cap. Uniqure’s shares have experienced weakness in recent months and could represent a good buying opportunity, with the company sitting on an enviable mountain of cash (over $300 million) and several promising candidates in its pipeline, including a potential best-in-class Hemophilia B treatment.

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Spero Therapeutics

Spero Therapeutics, Inc. (NASDAQ:SPRO) hasn’t been nearly as popular as QURE, with just seven of the hedge funds that are tracked by Insider Monkey being shareholders. Aquilo is one of those funds, having owned SPRO dating back to its first 13F filing in 2018. Mark Lampert’s Biotechnology Value Fund is another, having owned the stock since it went public in 2017. Spero shares have climbed by 34% this year thanks in part to achieving positive topline results from the phase 3 trial of its oral antibiotic candidate tebipenem HBr.

Blueprint Medicines Corporation

Hedge funds have steadily grown more bullish on Blueprint Medicines Corporation (NASDAQ:BPMC) in recent years, including some big names like Andreas Halvorsen’s Viking Global, which took a stake in BPMC last year. Wedbush removed Blueprint Medicines Corporation from its Best Ideas List in September, noting that with shares up by 27% this year and fewer near-term catalysts on the horizon, the stock’s risk/reward profile has flattened out for now.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.