Expanding his position in the health care space, billionaire investor Steven Cohen (Trades, Portfolio), who leads Point72 Asset Management, disclosed a 7.3% stake in Aptevo Therapeutics Inc. (APVO, Financial) on March 11.
In order to generate superior risk-adjusted returns, the guru’s Connecticut-based hedge fund uses long, short, macro and systematic strategies.
According to a Schedule 13G filing with the Securities and Exchange Commission, Cohen invested in 3.2 million shares of the Seattle-based biotechnology company.
The company, which develops novel oncology, autoimmune and hematology therapeutics, has a $20.14 million market cap; its shares were trading around 88 cents on Thursday with a price-book ratio of 0.45 and a price-sales ratio of 1, which GuruFocus noted were near multiyear lows.
According to the median price-sales chart, the stock is trading below its historical average, suggesting it is undervalued.
On March 7, Aptevo announced a $22 million equity offering, consisting of 19.85 million shares of common stock and related warrants for $1 per share. In addition, it offered pre-funded warrants to purchase up to 2.15 million shares and related warrants to purchase up to 2.15 million shares at a combined price of 99 cents. The warrants are exercisable at respective prices of $1.30 per share and 1 cent per share. The closing date was March 11.
GuruFocus rated Aptevo’s financial strength 4 out of 10. Recording a decline in revenue per share over the last three years, the Altman Z-Score of -3.13 warns the company is at risk of going bankrupt.
The company’s profitability and growth fared even worse, scoring a 2 out of 10 rating. Although its margins and returns are negative, they still outperform a majority of competitors. The low Piotroski F-Score of 1, however, implies poor business operations.
Jim Simons (Trades, Portfolio)’ Renaissance Technologies is the only other guru invested in the stock. The firm holds 6.55% of outstanding shares.
Portfolio composition
Cohen’s $20.48 billion equity portfolio, which is composed of 922 stocks as of the end of fourth-quarter 2018, is largely invested in the health care sector, followed by smaller holdings in the consumer cyclical, technology and energy sectors.
Other health care stocks he currently has large positions in include Baxter International Inc. (BAX, Financial), Johnson & Johnson (JNJ, Financial), Inogen Inc. (INGN, Financial), Loxo Oncology Inc. (LOXO, Financial) and IQVIA Holdings Inc. (IQV, Financial).
Disclosure: No positions.
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