Point72 Asset Management leader Steven Cohen (Trades, Portfolio) disclosed earlier this week his firm entered an 8.9% stake in CytomX Therapeutics Inc. (CTMX, Financial).
With the goal of generating 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 5.5 million shares of the San Francisco-based biopharmaceutical company on Jan. 25 after previously exiting a position in the third quarter of 2020. The stock traded for an average price of $7.10 per share on the day of the transaction. The stake was given 0.2% space in the equity portfolio.
The clinical-stage biotech company, which develops probody therapeutics for treating cancer, has a $428.11 million market cap; its shares were trading around $6.80 on Wednesday with a price-book ratio of 6.63 and a price-sales ratio of 3.48.
While the price chart suggests the stock is overvalued in comparison to the median price-book ratio and median price-sales value, the GF Value chart indicates it is currently a potential value trap.
On Jan. 19, CytomX announced a $100 million public offering of common stock, issuing 14.3 million shares for $7 each. Underwriters were also granted a 30-day option to purchase up to an additional 2.14 million shares at the same price.
The company plans to use the net proceeds of the offering to further develop its proprietary probody therapeutics pipeline as well as fund research. Any remaining funds following these investments will be allocated to capital expenditures, working capital and other general corporate purposes.
The offering closed on Jan. 26.
CytomX is expected to report its fourth-quarter 2020 earnings in February.
GuruFocus rated CytomX's financial strength 4 out of 10. Despite having a comfortable level of interest coverage, the Altman Z-Score of -0.43 warns the company could be in danger of going bankrupt if it does not improve its liquidity position.
The company's profitability fared even worse, scoring a 3 out of 10 rating. Although the operating margin is expanding, CytomX is being weighed down by negative returns that outperform around half of its competitors.
Cohen is by far the company's largest guru shareholder. Jim Simons (Trades, Portfolio)' Renaissance Technologies, Jeremy Grantham (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Louis Moore Bacon (Trades, Portfolio) also have positions in the stock.
Portfolio composition
Cohen's $19.52 billion equity portfolio, which was composed of 894 stocks as of the three months ended Sept. 30, is most heavily invested in the health care, technology and consumer cyclical sectors.
Other biotech companies Cohen owned as of the end of the third quarter included Alexion Pharmaceuticals Inc. (ALXN, Financial), Arena Pharmaceuticals Inc. (ARNA, Financial), Macrogenics Inc. (MGNX, Financial), Biomarin Pharmaceutical Inc. (BMRN, Financial), Novavax Inc. (NVAX, Financial) and Arrowhead Pharmaceuticals Inc. (ARWR, Financial).
Disclosure: No positions.
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