After establishing a holding in Bellus Health Inc. (BLU, Financial) during the second quarter, billionaire investor Steven Cohen (Trades, Portfolio) disclosed earlier this week his firm, Point72 Asset Management, upped the position by 1,712.12%.
In order to generate superior risk-adjusted returns, the guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.
According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in 5.87 million shares of the Canadian biotech company on Oct. 22, impacting the equity portfolio by 0.09%. The stock traded for an average per-share price of $2.47 on the day of the transaction.
He now holds 6.22 million shares total, which represent 0.10% of the equity portfolio. GuruFocus estimates Cohen has lost 16.91% on the investment so far.
The clinical-stage biopharmaceutical company, which develops treatments for people with chronic coughs and other afferent hypersensitization-related disorders, has a $193.21 million market cap; its shares were trading around $2.42 on Tuesday with a price-book ratio of 1.2 and a price-sales ratio of 3,243.1. GuruFocus noted the share price and price-book ratio are near multiyear lows.
The price chart shows the stock is trading below its median price-book ratio, but above its median price-sales value.
In August, Bellus reported its second-quarter results. It posted a net loss of $8.4 million, or 14 cents per share, which declined from a loss of $5.9 million, or 13 cents per share, a year ago. It also recorded $74 million in cash, cash equivalents and short-term investments.
On Oct. 19, the company announced a 15.5 million-share public offering of its common stock in both Canada and the U.S. The offering was priced at $2.25 per share. Underwriters were also granted a 30-day option of purchasing up to an additional 2.33 million shares.
The offering, which generated $40 million in total gross proceeds for 17.8 million shares, closed on Oct. 22. Bellus said the net proceeds will be used to fund research and development activities, cover general and administrative expenses as well as working capital needs and other general corporate purposes.
GuruFocus rated Bellus' financial strength 7 out of 10 on the back of a high cash-to-debt ratio and a robust Altman Z-Score of 10.34 that indicates it is in good standing despite the Sloan ratio suggesting it has poor earnings quality. In addition, its revenue per share had been declining for the past five years.
The company's profitability did not fare as well, scoring a 1 out of 10 rating as it is being weighed down by a declining operating margin and negative returns that underperform a majority of competitors. Bellus also has a low Piotroski F-Score of 3, which indicates business conditions are in poor shape, and a predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically return an average of 1.1% annually over a 10-year period.
Cohen is the company's largest guru shareholder with a 10.29% stake. Jim Simons (Trades, Portfolio)' Renaissance Technologies also has a position in the stock.
Portfolio composition
Cohen's $15.33 billion equity portfolio, which was composed of 778 stocks as of the three months ended June 30, is most heavily invested in the health care, technology and consumer cyclical sectors.
Other health care companies Cohen owned as of the end of the second quarter included Merck & Co. Inc. (MRK, Financial), Immunomedics Inc. (IMMU, Financial), Alexion Pharmaceuticals Inc. (ALXN, Financial), Centene Corp. (CNC, Financial) and Laboratory Corp of America Holdings (LH, Financial).
Disclosure: No positions.
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