Billionaire investor Steven Cohen (Trades, Portfolio), who leads Point72 Asset Management, disclosed on May 10 that he expanded his stake in Intersect ENT Inc. (XENT, Financial) by 221.55%.
The guru’s Connecticut-based hedge fund seeks to generate superior risk-adjusted returns using long, short, macro and systematic strategies.
According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in 1.16 million shares of the California-based medical devices manufacturer on May 9. He now holds 1.68 million shares of the company, which represent approximately 0.23% of the equity portfolio. During the quarter, the stock traded for an average price of $27.73 per share.
The company, which develops products for patients with ear, nose and throat conditions, has an $855.84 million market cap; its shares were trading around $27.39 on Tuesday with a price-book ratio near a one-year low at 7.14 and a price-sales ratio near a two-year low at 7.60.
The median price-sales chart shows the stock is trading below its historical average, suggesting it is undervalued.
The company reported its first-quarter results on May 6, posting an earnings loss of 35 cents per share on $26.7 million in revenue. While earnings were 5 cents short of estimates, revenue beat Zacks Equity Research’s expectations.
Intersect also announced that CEO Lisa Earnhardt will be stepping down on June 5 to accept another opportunity. As the company begins its search for her successor, Kieran Gallahue will serve as interim CEO and has also been appointed executive chairman of the board.
Driven by no long-term debt and comfortable interest coverage, Intersect’s financial strength was rated a perfect 10 out of 10 by GuruFocus. In addition, the robust Altman Z-Score of 24.49 indicates the company is in good financial health.
The company’s profitability and growth scored a 5 out of 10 rating. Although the operating margin is expanding, Intersect’s returns underperform at least 60% of competitors. In addition, it is weighed down by a low Piotroski F-Score of 3, which implies poor business conditions, and recorded a slowdown in revenue per share growth over the last 12 months.
With 1.7% of outstanding shares at the end of fourth-quarter 2018, Cohen is Intersect ENT’s largest guru shareholder. Other gurus invested in the stock were Ron Baron (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).
Portfolio composition
Cohen’s $20.48 billion equity portfolio, which is composed of 922 stocks as of the end of the fourth quarter, is largely invested in the health care and consumer cyclical sectors, followed by smaller holdings in the technology and energy sectors.
Other medical device manufacturers he currently has positions in include Inogen Inc. (INGN, Financial), Medtronic PLC (MDT, Financial), LivaNova PLC (LIVN, Financial), Wright Medical Group NV (WMGI, Financial), Nevro Corp. (NVRO, Financial), Tandem Diabetes Care Inc. (TNDM, Financial), Stryker Corp. (SYK, Financial), NuVasive Inc. (NUVA, Financial) and Abbott Laboratories (ABT, Financial).
Disclosure: No positions.
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