On November 1, we noted how well shares of Pfizer performed, despite the Dow (NYSEARCA:DIA) falling nearly 300 points after George Papandreou surprised European leaders when he called for a referendum on the new aid package for Greece. In fact, the global pharmaceutical company was the only blue chip member to close in the green on that day. However, we raised concerns about the company’s future pipeline since Lipitor is losing patent protection this month. Newly released 13-F forms show that were not the only ones concerned about Pfizer. Two well-known hedge fund managers are taking the money and running by liquidating their entire stakes in the company.
While investors do not know the trading strategy used by the big boys, the 13-F form can provide insight to how successful investors think. Investors should keep in mind that this is backward looking information that may have changed since the end of the third quarter.
David Einhorn, the head of Greenlight Capital, made waves recently by shorting Green Mountain Coffee Roasters (NASDAQ:GMCR) and disclosing a larger long position in the Market Vectors Gold Miners ETF (NYSEARCA:GDX). As of the end of the third quarter, the New York-based hedge fund has reduced its overall health-care weightings by 11.1%. The hedge fund liquidated its entire 23.45 million share stake in Pfizer (NYSE:PFE). In his Q3 letter to shareholders, Einhorn explains, “We exited Pfizer because much of our thesis played out and we became increasingly concerned about future reimbursement cuts for branded pharmaceuticals and the recent disclosure of additional government investigations into its marketing practices. Over our two and a half year holding period, the investment generated a double-digit annualized return that modestly outperformed the market.” Get the most recent company news and stock data here >>
David Tepper is the hedge fund manager and founder of Appalossa Management. According the fund’s latest 13-F filing, Tepper sold his entire 14.5 million share take in Pfizer during the third quarter. He also sold off his entire stake in Merck & Co. (NYSE:MRK), Unitedhealth Group, Inc. (NYSE:UNH), and MetLife (NYSE:MET). Pfizer had been one of the firm’s largest holdings by value, with a stake worth nearly $300 million as of June 30. Tepper is known for investing in distressed companies and manages around $16 billion. According to The Wall Street Journal, he made between $2 billion and $3 billion personally last year.
Here are other top pharma stocks hedge funds might prefer over Pfizer: Johnson & Johnson (NYSE:JNJ), GlaxoSmithKline plc (NYSE:GSK), Bristol Myers Squibb Co. (NYSE:BMY), Eli Lilly & Co. (NYSE:LLY), Abbott Laboratories (NYSE:ABT), Novartis AG (NYSE:NVS), Mylan Inc. (NASDAQ:MYL), Amgen, Inc. (NASDAQ:AMGN), and Sanofi-Aventis SA (NYSE:SNY).
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