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The Baupost Group’s Seth Klarman Adds to Stake of Idenix Pharmaceuticals
Posted by: Dianne Tordillo (IP Logged)
Date: November 13, 2012 11:59AM
As of Nov. 9, Guru investor Seth Klarman of Boston-based hedge fund firm, the Baupost Group, has reported to adding to his shares of company, Idenix Phamaceuticals Inc. (IDIX), increasing his stake by 65.27 percent according to GuruFocus Real Time Picks.
This makes Klarman 12.34 percent owner of Idenix.
Introduced to Klarman’s portfolio in the second quarter of 2011, Idenix is in the business of developing and commercializing medicines that treat human viral and infectious diseases, such as hepatitis C and hepatitis B and HIV/AIDS. Idenix is headquartered in Cambridge, Mass., with a market cap of $544.5 million.
For the past consecutive five quarters since acquiring Idenix, Klarman has outstandingly increased his shares of the stock, beginning with a little over 1.2 million shares and now standing at 16.5 million shares after this latest transaction. Klarman reported only 10 million shares in the second quarter of this year.
In its third quarter fiscal report, Idenix reported a decrease in total revenues for the first three quarters of this year. Below is an excerpt from the report to get the company’s current financial standing:
“For the third quarter ended September 30, 2012, Idenix reported total revenues of $32.3 million, compared to total revenues of $2.6 million in the third quarter of 2011. The Company reported a net income of $4.3 million, or $0.03 per basic and diluted share, for the third quarter ended September 30, 2012, compared to a net loss of $11.7 million, or $0.12 per basic and diluted share for the third quarter ended September 30, 2011.
For the nine months ended September 30, 2012, Idenix reported total revenues of $69.3 million, compared to total revenues of $7.7 million for the nine months ended September 30, 2011. The Company reported a net loss of $9.7 million, or $0.09 per basic and diluted share, for the nine months ended September 30, 2012, compared to a net loss of $33.9 million, or $0.39 per basic and diluted share for the nine months ended September 30, 2011. The change in net loss is mainly due to additional revenue as a result of the recognition of $36.1 million of deferred revenue in the first quarter of 2012 related to the termination of the license agreement with ViiV Healthcare Company and $27.1 million of additional revenue recognized in the third quarter of 2012 as a result of the restructuring of our collaboration with Novartis Pharma AG in July 2012. These amounts were offset by increases in research and development expenses of $24.1 million related primarily to IDX184 and IDX719, professional and legal costs of $4.5 million and an $8.0 million intangible asset impairment charge in the third quarter of 2012 related to the termination agreement with Novartis.”
Idenix’s revenue has been in decline for the last couple of years, at a negative growth rate of 44.5 percent in a five year time frame, according to GuruFocus 10-Year Financials. In addition, its operating margin has also been in decline, and its recorded data has been revealing a shrinking free cash flow.
The second largest sector represented in Klarman’s portfolio is Health Care, trailing behind technology as the leading sector. See Klarman’s sector weightings here.
Besides Klarman, other Gurus who have holdings of Idenix Pharmaceuticals include John Burbank, Louis Moore Bacon and Steven Cohen. To view the complete list of Gurus and their holding history of Idenix, see IDIX: Holding History.
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Guru Discussed: Seth Klarman: Current Portfolio, Stock Picks
Stocks Discussed: IDIX,
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