"Tracking Baker Brothers Portfolio – Q3 2017 Update"
"Baker Brothers’ 13F portfolio increased from $11.44B to $12.33B. The number of positions increased from 120 to 121.BeiGene Ltd. Stake was increased while reducing Achaogen.The top-three positions are Incyte Corporation, Seattle Genetics, and Alexion Pharmaceuticals and they add up to almost ~62% of the portfolio.This article is first in a series that provides an ongoing analysis of the changes made to Baker Brothers’ 13F portfolio on a quarterly basis. It is based on Baker Brothers’ regulatory 13F Form filed on 11/14/2017.Baker Brothers was founded by Julian & Felix Baker in 2000. Despite a less than ~50% win-record, the firm has managed to post outstanding returns thru prudent position sizing. Over the years, the firm had a number of home runs as the invested firms got acquired at huge premiums. Recent M&A winners include Pharmacyclics (acquired by AbbVie), Synageva (acquired by Alexion), and Salix (acquired by Valeant).Assets Under Management (AUM) is at around $12.5B. They invest in over a 100 companies although only around 20 are sized above 0.5% of the portfolio. As a percentage of AUM, allocation to the highest conviction picks can be very high at over 30%.This quarter, Baker Brothers’ 13F portfolio increased ~8% from $11.44B to $12.33B. The number of holdings increased from 120 to 121. The top three holdings are at ~62% while the top five holdings are close to ~75% of the 13F assets: Incyte Corporation (INCY), Seattle Genetics (SGEN), Alexion Pharmaceuticals (ALXN), Acadia Pharmaceuticals (ACAD), and BioMarin Pharmaceuticals (BMRN).Notes: a) Regulatory Filings on 1/22/2018 indicate Baker Brothers owning 22.4% of BeiGene Ltd (BGNE). Around 2M ADS shares were purchased following a secondary offering at $101 per share bringing the total ADS shares held to ~5.81M. The ownership stake also includes ~75.8M ordinary shares also held (equivalent to 5.83M ADS shares, 1 ADS share = 13 ordinary shares). Including those, the position sizing is close to 10% of the portfolio, and b) Regulatory Filings after the quarter ended show them owning 4.9M shares (27.3% of business) of Erytech Pharma S/A (ERYP). The position was acquired at a cost-basis of ~$24.50: around 3M shares in the public offering at $23.26 and the rest for $47.5M before. For investors attempting to follow Baker Brothers, these two stocks are good to consider for further research.The spreadsheet below highlights changes to Baker Brothers’ 13F holdings in Q3 2017:To learn more about how to profit from a strategy of following the best hedge fund picks, check out our book ."