Top 10 Stock Picks of Efrem Kamen’s Pura Vida Investments
Posted On July 28, 2022
In this article, we shall be going through the top 10 stock picks of Efrem Kamen’s Pura Vida Investments. To skip our detailed analysis of Kamen’s history, his investment strategy, and hedge fund performance, go directly and see Top 5 Stock Picks of Efrem Kamen’s Pura Vida Investments.
Efrem Kamen currently serves as Managing Member at Pura Vida Investments, an investment firm primarily focused on the healthcare sector. Graduating in 2001 with a Bachelor’s of Arts in Economics and Linguistics from Columbia College in New York, Kamen also serves as Assistant Professor at Columbia University, where he has created and teaches a course on investing in medical technology. Prior to founding Pura Vida Investments in 2012, Kamen had been associated with the investment sector for almost a decade, notably working for Chicago-based Citadel Investment Group, Diamondback Capital Management, Cowen Group Inc. and many others. According to Pura Vida Investment’s website, Kamen reported a net worth of almost $3.3 million in 2021. He is considered one of the foremost authorities on medical device investments, equity research, biomedical engineering, etc.
According to Pura Vida Investments’ official website, Kamen strategizes his investment decisions by first identifying inflections in company-specific valuations. He then exploits structural shifts in the healthcare industry, all the while capitalizing on every dislocation. He is an advocate of leveraging the vast investment experience of his team and diverting collective attention to uncovering value, and recognizing inflection points which are specific to each and every company. The website also states that Kamen seeks to generate returns over the medium to the long-term, and utilizes analytical tools to collect and assess a variety of data points to create proprietary methods which will aid in identifying trends and patterns. Moreover, Pura Vida Investments boasts of a diverse research net, thorough analysis and critical thinking mechanisms to carve a differentiated view of company-specific valuations, with a dedicated focus on “under or over-appreciated catalysts.” It aims to look past day-to-day volatility and capitalize on major shifts in value over the medium and long term.
As of Q1 2022, Pura Vida’s 13F portfolio is heavily concentrated with large investments in biotechnology, genomics instruments, bio-therapeutics and medical technology. Furthermore, the healthcare investment firm has recorded a growth percentage of 1.12%, with a portfolio value worth almost $3.1 billion. As of March 2022, Pura Vida Investments has an AUM of $817.6 million, a result of performance being down by 9.67% from the previous quarter.
Prominent stocks in Pura Vida’s 13F portfolio include Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Boston Scientific Corp. (NYSE:BSX). However, in this article, we will only be discussing the top 10 stock picks of Efrem Kamen’s Pura Vida Investments.
The companies listed below have been chosen from Pura Vida Investments’ 13F investment portfolio from Q1 2022. They have been ranked based on the stakes Kamen holds in each stock.
Data from 900+ elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Top 10 Stock Picks of Efrem Kamen’s Pura Vida Investments
Percentage of Pura Vida Investments’ 13F Portfolio: 0.73%
Number of Hedge Fund Holdings: 18
Based in San Jose, California, Outset Medical Inc. (NASDAQ:OM) is a medical technology company specializing in dialysis-related technology products and it operates across the United States. According to their website, Outset (NASDAQ:OM) is focused on “creating change, driving widespread adoption of new technology, and delivering on the promise of an improved experience for patients and lower cost of care for healthcare providers”. As of Q1 2022, Christopher James’ Partner Fund Management is the largest stakeholder in the company, owning more than 2.8 million shares which are worth more than $127.6 million. Kamen’s Pura Vida Investments owns 474,901 shares which are worth $21.6 million, a result of Kamen strengthening his hold over the stock by 5%, with Outset Medical Inc. (NASDAQ:OM) making up for 0.73% of Pura Vida’s 13F portfolio for Q1 2022.
According to Insider Monkey’s exclusive database where we track more than 900 elite hedge funds, investor interest around Outset Medical Inc. (NASDAQ:OM) has remained largely the same from Q4 2021, with 18 hedge funds remaining long the stock.
Percentage of Pura Vida Investments’ 13F Portfolio: 0.74%
Number of Hedge Fund Holdings: 49
Vertex Pharmaceuticals (NASDAQ:VRTX) is an American biopharmaceutical company headquartered in Boston, Massachusetts, which pioneered explicit strategies of rational drug design over combinational chemistry. Founded in 1989, Vertex Pharmaceuticals (NASDAQ:VRTX) has also played an immense role in venture philanthropy through the development of Kalydeco, a medication used to treat cystic fibrosis. As of the first quarter of 2022, Jim Simons’ Renaissance Technologies is the leading shareholder in the stock, having a stake value of almost $445.6 million.
Kamen owns a little more than 84,000 shares in Vertex Pharmaceuticals (NASDAQ:VRTX), having a stake of around $21.9 million, a result of Kamen increasing his hold over the stock by a staggering 242%, making the stock 0.74% of his 13F portfolio. Investor interest around the stock has taken a hit as of late, with only 49 hedge funds having stakes in Vertex Pharmaceuticals (NASDAQ:VRTX) in the first quarter of 2022, compared to 61 hedge funds just a quarter ago.
Vertex Pharmaceuticals (NASDAQ:VRTX) featured in Tweedy, Brown Company LLC’s annual investor letter for the fourth quarter of 2021, a copy of which can be obtained here. This is what they said:
“Portfolio activity during the quarter was relatively modest, and mostly on the sell side, taking advantage of the market’s advance to trim or sell positions that were trading at or above our estimates of their underlying intrinsic values. In terms of newly established positions, there were only two, (including) Vertex Pharmaceutical (NASDAQ:VRTX), a US-based pharma company specializing in therapies for cystic fibrosis (Value Fund). Both of these companies at purchase were trading at substantial discounts from our estimates of their underlying intrinsic values, and, in our view, are financially strong and well positioned for future growth.
Vertex Pharmaceutical (NASDAQ:VRTX), which was purchased by the Tweedy, Browne Value Fund in mid-November 2021, is a biotechnology company that specializes in rare diseases/orphan drugs. The company’s current strength is in the treatment of cystic fibrosis, where its therapies are the gold standard of care globally. Analysts expect that Vertex (NASDAQ:VRTX) will be able to maintain its dominant position in the treatment of this disease, which afflicts 83,000 people worldwide, largely due to the effectiveness of its therapies, the fact that patent expirations for its drugs are a long way off into the future (2030-2037), and the lack of effective competition. This affords Vertex (NASDAQ:VRTX) pricing power for its drugs, as there are currently no good alternative therapies. Assuming the company receives complete international and pediatric approvals, Vertex’s (NASDAQ:VRTX) portfolio of approved drugs would be eligible to treat 90% of the people who have this disease. Vertex’s (NASDAQ:VRTX) therapies are also not one and done drugs, but rather start in early childhood and continue throughout the patient’s lifetime. The company’s strong cash flow, in our view, should support the company’s development of even better next generation drugs to treat cystic fibrosis as well as diversify its drug pipeline to treat other rare diseases. However, many of these treatments are on the horizon or are in their incipient stages of development.
In the quarter just prior to the Fund’s initial purchase of Vertex (NASDAQ:VRTX), knowledgeable insiders, including the company’s CEO and its lead independent director, purchased millions of dollars of the company’s stock at prices higher than we paid for the Fund’s shares. The company itself also repurchased approximately $642 million worth of its shares in the 3rd quarter at or around the same prices paid by the CEO and lead director ($195 per share). We estimate the company’s underlying intrinsic value to be in the range of $240 to $250 per share, and we believe that estimate is well supported by current, here-and-now cash flow, operating income and earnings per share. Morningstar and Goldman Sachs have valued the company at substantially higher prices than our estimate of $240 – $250 per share. The Fund’s weighted average cost in the stock is $187. At initial purchase, the company was trading at approximately 14 times current earnings, and 9.9 times enterprise value to earnings before interest and taxes.”
Percentage of Pura Vida Investments’ 13F Portfolio: 0.75%
Number of Hedge Fund Holdings: 23
Headquartered in Mason, Ohio, AtriCure Inc. (NASDAQ:ATRC) is an American medical biotechnology company which specializes in the provision of innovative technological products for the treatment of Atrial Fibrillation and related conditions. According to their official site, they have served over 425,000 patients of ablation, trained over 2500 healthcare professionals and sold products in over 50 countries. Kamen’s Pura Vida Investments is the third-largest shareholder in the company, owning 336,615 shares which have been valued at more than $22.1 million, making up for 0.75% of Kamen’s Q1 2022 investment portfolio. Although Kamen has decreased his hold over the stock by 11% in the first quarter of 2022, investor interest around AtriCure Inc. (NASDAQ:ATRC) has remained steady, with 23 hedge funds including the medical technology giant in their 13F investment portfolios in Q1 2022 and Q4 2021, respectively.
Israel Englander’s Millennium Management is the largest stakeholder in AtriCure Inc. (NASDAQ:ATRC), owning more than 750,844 shares worth more than $49.3 million, with the stock making up for 0.02% of Englander’s 13F portfolio. Alongside prominent stocks like Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Boston Scientific Corp. (NYSE:BSX), AtriCure Inc. (NASDAQ:ATRC) is one of the top stock picks of Efrem Kamen’s Pura Vida Investments.
Percentage of Pura Vida Investments’ 13F Portfolio: 0.96%
Number of Hedge Fund Holdings: 33
Founded in 1987, LivaNova PLC (NASDAQ:LIVN) is an American medical device manufacturer which is domiciled in Eastbourne Terrace, London, but operates out of Houston, Texas. It specializes in the production and development of devices used for cardiac surgery and neuromodulation. Efrem Kamen’s Pura Vida Investment owns more than 347,498 shares in LivaNova (NASDAQ:LIVN), a result of Kamen decreasing his hold over the stock by 32%, with LivaNova (NASDAQ:LIVN) now making up for only 0.96% of Pura Vida’s investment portfolio. Kamen has stakes worth more than $28.4 million in the company. The largest shareholder in the stock is Harris Associates, who has a stake worth more than $316.9 million.
In the first quarter of 2022, 33 hedge funds have reported bullish bets on LivaNova (NASDAQ:LIVN), with collective stakes worth more than $1.17 billion. This marks a slight rise in investor interest as compared to the previous quarter where only 31 hedge funds were long LivaNova (NASDAQ:LIVN).
Diamond Hill Capital, an investment management firm, mentioned LivaNova (NASDAQ:LIVN) in their Q3 2021 investor letter. This is what they had to say.
“Our health care holdings were negative in aggregate, but outpaced index peers, which boosted relative performance along with our below-benchmark positioning. On an individual holdings’ basis, we exited global medical technology company LivaNova (NASDAQ:LIVN) as shares approached our estimate of intrinsic value.”
Other prominent stocks featured on Efrem Kamen’s 13F portfolio besides LivaNova (NASDAQ:LIVN) were Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Boston Scientific Corp. (NYSE:BSX).
Percentage of Pura Vida Investments’ 13F Portfolio: 1.05%
Number of Hedge Fund Holdings: 61
Based in Cambridge, Massachusetts, Biogen Inc. (NASDAQ:BIIB) is an American multinational biotechnology company which was founded in 1978, and has since dominated in the discovery, development, and delivery of therapies for the treatment of neurological diseases, to patients globally. The company ranked 228 on Fortune 500‘s list of largest US corporations by revenue in 2021. As of the first quarter of 2022, Two Sigma Advisors is the largest shareholder in the company, having stakes worth more than $231.3 million. In the first quarter of 2022, Efrem’s Pura Vida Investments bought 147,135 shares which have been valued at almost $31 million, making up for 1.05% of Efrem’s 13F portfolio.
On May 4, Oppenheimer analyst Jay Olsen decreased the price target on Biogen (NASDAQ:BIIB) from $240 to $225, maintaining its ‘Outperform’ rating. Biogen (NASDAQ:BIIB), in 2021, reported a total revenue of almost $11 billion, with analysts predicting a growth percentage of 12.7% for Q2 2022.
“Biogen (83%, 2.43%; 5%, 0.10%) (NASDAQ:BIIB), a biotechnology company specializing in therapies for the treatment of neurological diseases, was a strong contributor before we exited the position in the first half. We began acquiring shares in January 2021, paying between 9- 11x FCF and a discount to our appraisal, even if the company’s promising drug pipeline turned out to be worth 0. After Biogen’s (NASDAQ:BIIB) Alzheimer drug Aduhelm was approved in June, we quickly sold out after the stock’s price appreciated over 70% and briefly exceeded our appraisal of the value. We re-initiated a position in Biogen (NASDAQ:BIIB) in December at a price below our original cost basis from January. The stock became very cheap once again after Aduhelm’s early sales disappointed due to its high initial cost before management correctly cut the price. We think Biogen’s (NASDAQ:BIIB) core Multiple sclerosis (MS) and Biosimilars businesses are strong enough to create sustainable double-digit EPS growth, even if Aduhelm and the entire Alzheimer’s program is worth zero. We also expect a board led by large shareholders to continue the company’s accretive repurchase, while considering other beneficial corporate actions.”