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Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying

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·8 min read
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In this article we present the list of Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying. Click to skip ahead and see the Top 5 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying.

Johnson & Johnson (NYSE:JNJ), Merck & Co., Inc. (NYSE:MRK), and Perrigo Co Plc (NASDAQ:PRGO) were among the healthcare stocks being sold by Sphera Global Healthcare during the third quarter as the hedge fund shifted its assets into some of the other industry players that it finds more compelling.

Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund is a long-biased equity hedge fund that invests primarily in the healthcare space. The fund, which is based in Tel Aviv and also has operations in New York, ranks as Israel’s largest hedge fund manager. The fund was founded in 2004 as a partnership between Mr. Breen and Mr. Arkin, the latter being a 40-year pharmaceutical industry veteran.

The fund uses a bottoms-up, research-intensive approach to guide its investment decisions, with its investment team being comprised of members with several PhDs and MDs to their credit. Each investment team member focuses solely on one disease area, allowing them to become experts in that field and to better understand the complexities and potentially disruptive technologies that could emerge in it.

Since its inception in March 2007, the Sphera Global Healthcare Fund Class A has delivered compound annual returns of 8.97% through March 2020. The fund’s fortunes have run hot and cold in recent years, as it posted double-digit gains in 2019, 2017, and 2015, with single-digit losses sandwiched in between those years in 2018 and 2016.

At the end of September 2021, Sphera Global Healthcare Fund’s 13F portfolio contained assets valued at $1.19 billion, down from $1.48 billion quarter earlier, as it axed a net total of 18 holdings from its portfolio during Q3. The fund remained bullish on many of its top positions, using the proceeds from those sales to further grow them. In this article we’ll take a look at ten of the fund’s top stock positions which it was buying shares of during Q3.

Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying
Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying

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Now then, let’s check out the Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.

Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying

10. Zai Lab Limited (NASDAQ:ZLAB)

Sphera Global raised its stake in Zai Lab Limited (NASDAQ:ZLAB) by nearly 50% during Q3, adding 48,0365 shares to its 13F portfolio to give it a position of 145,982 shares valued at $15.39 million. Hedge funds have steadily grown more bullish on Zai Lab Limited (NASDAQ:ZLAB) in recent quarters, as 36 of the funds tracked by Insider Monkey’s database were long ZLAB at the end of Q3, maintaining the new high set a quarter earlier, which followed four consecutive quarters of growing hedge fund ownership.

The Chinese biotechnology firm was the only China-based holding of ClearBridge Investments’ International Growth EAFE Strategy as of the end of Q3, with the fund commenting in its Q3 2021 investor letter that it likes the growth potential and immense optionality of Zai Lab Limited (NASDAQ:ZLAB) given the Chinese government’s intentions to grow its domestic healthcare industry.

ClearBridge Investments, an investment management firm, published its “International Growth EAFE Strategy” third quarter 2021 investor letter and mentioned Zai Lab Limited (NASDAQ:ZLAB). Here is what the fund said:

"Biotechnology company Zai Lab is now our only holding in China. The government wants to grow the domestic health care space as part of its social mission, so although Zai is not a big position, we still believe it is a growth story with immense optionality. The stock was hurt in the quarter by negative sentiment spreading into more areas of the Chinese market.”

9. Fate Therapeutics Inc. (NASDAQ:FATE)

Sphera Global bought 54,000 shares of Fate Therapeutics Inc (NASDAQ:FATE) during the third quarter, growing the holding that it first started building in the second quarter of 2020 to 219,299 shares worth $13 million at the end of Q3.

Fate Therapeutics Inc (NASDAQ:FATE) has enjoyed a surge in hedge fund support over the past three years, being found in the 13F portfolios of 36 of the funds tracked by Insider Monkey as of the end of Q3, compared to just 10 in the middle of 2018. Hedge funds have generally scored huge returns on their investments, buying into the stock during 2019 and the first half of 2020 just before FATE’s share price tripled over the following three quarters.

One of the 15 Fastest Growing Biotech Companies in the US, Fate Therapeutics Inc (NASDAQ:FATE) shares could be poised for another big year, with meaningful data catalysts that have the potential to drive the stock higher. The biopharmaceutical company, which has a focus on programmed cellular immunotherapies, has several ongoing trials that have been producing positive results, including its trials of FT516 and FT596, both of which received promising updates in December.

8. Altimmune, Inc. (NASDAQ:ALT)

While Johnson & Johnson (NYSE:JNJ), Merck & Co., Inc. (NYSE:MRK), and Perrigo Co Plc (NASDAQ:PRGO) weren’t on Sphera Global’s shopping list during Q3, Altimmune, Inc. (NASDAQ:ALT) most certainly was. The fund added 405,459 shares of ALT to its 13F portfolio, hiking the size of its position by 59% to just under 1.09 million shares valued at $12.32 million on September 30.

Altimmune, Inc. (NASDAQ:ALT) released compelling trial data towards the end of September from the phase 1 trial for its obesity medication ALT-801. The data showed the treatment has the potential to be a best-in-class offering, which was coupled with a reasonable safety profile. After 12 weeks, trial subjects had experienced mean weight losses of 4.9%, 10.3%, and 9.0% respectively, depending on which dosage of ALT-801 they were given.

With obesity treatments expected to be the next biopharmaceutical mega-market, Altimmune, Inc. (NASDAQ:ALT) is well positioned to take a chunk of that hefty market. The company does however lack any meaningful sources of revenue in the near term and may need to dilute shares in the future to raise needed capital.

7. Pfizer Inc. (NYSE:PFE)

Some of the biggest names in the healthcare industry take the remaining top positions on this list, beginning with Pfizer Inc. (NYSE:PFE), which Sphera Global bought a large new position of nearly 1.11 million shares in during Q3, a position valued at over $47.59 million on September 30.

Hedge fund ownership of Pfizer Inc. (NYSE:PFE) crumbled between 2016 and 2019, falling by nearly 50% during that time as managers have worried about the company losing exclusivity to some of its biggest blockbuster drugs, including Viagra and Lipitor. Hedge fund ownership has yet to rebound since then, though the market has grown increasingly bullish on Pfizer Inc. (NYSE:PFE)’s next wave of drugs and the continually expanding market for its Covid-19 vaccines, with children now approved for the shots and the public at large being encouraged to get added booster shots.

6. Kymera Therapeutics, Inc. (NASDAQ:KYMR)

The second half of our list of Sphera Global’s favorite healthcare stocks that the fund was buying during Q3 of 2021 begins with Kymera Therapeutics, Inc. (NASDAQ:KYMR). The Tel Aviv-based fund bought 99,365 KYMR shares during the quarter according to its latest 13F filing with the SEC, growing the size of its holding to 359,260 shares valued at over $21.1 million as of September 30.

Sphera Global was one of 21 of the funds tracked by Insider Monkey’s hedge fund database that were long Kymera Therapeutics, Inc. (NASDAQ:KYMR) on September 30, with those funds owning a total of 11.92 million shares. Mark Lampert’s Biotechnology Value Fund and Jeremy Green’s Redmile Group are among the other prominent shareholders of KYMR.

Kymera Therapeutics, Inc. (NASDAQ:KYMR) is in the process of developing several small-molecule treatments that utilize the body’s protein degradation system to help combat disease-causing proteins. Kymera is in the process of developing its extensive pipeline of preclinical candidates, some of which are being worked on in collaboration with partners Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) and Sanofi (NYSE:SNY).

Click to continue reading and see the Top 5 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying.

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Disclosure: None. Top 10 Healthcare Stocks the Experts at Sphera Global Healthcare Fund Are Buying is originally published at Insider Monkey.