Last year, Todd Hagopian told us he expected promising biotechs to be acquired by pharmaceutical companies with expired patents and empty pipelines. Prior to its acquisition, Todd’s HIBEV fund returned more than 30% last year by investing in the right biotech company. On Monday, Sanofi and Celgene announced a multibillion-dollar takeover of biotechnology, demonstrating the continued existence of this investment strategy.
Celgene’s $ 9 billion takeover of Juno Therapeutics was 87% more than the Juno value it announced. Sanofi’s $ 11.6 billion bid for Bioverativ was 64% above its closing price on Friday. Every investor dreams of such a big day gain. But now the news is out, the stock is running, and it’s too late to buy them.
The key to making money out of this strategy is investing in the right stocks before acquiring the target. No one is better than Tod Hagupian.
In August 2016, Todd recommended three oncology companies he believes Gilead may receive: Incyte, $ 94, kite $ 55, Puma $ 68. In August 2017, Gilead said it will buy kites for $ 180. Since then, Incyte has been up to $ 150 before returning to $ 95. Puma deal up to 127 US dollars, but has returned to 91 US dollars.
Todd did not have to pay a premium by investing in these companies prior to the acquisition. This is why he does not lose the stock that has not been acquired. But the stock kite that was acquired rose from $ 55 to $ 180 a year. This is why he returned 30% last year without having to take a big risk.
Todd shows us how a good manager can apply wisdom, skill, and hard work, and the result is more than a mere chance.
Pharmaceutical companies with empty drug lines know that their ability to finance large acquisitions of historically low-interest debt is coming to an end. I expect there will be more such biotech acquisitions before interest rates rise further. Now is a good time to invest in the best biotech stocks.
Todd founded the HIBEV fund at Marketocracy in March 2011 with an average return of 24.91%, comparable to the 14.01% return of the S & P 500 over the same period. Todd has done better than America’s top equity fund manager for the past five years.