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Sydnee Gatewood
Sydnee Gatewood
Articles (3566) 

Steven Cohen Dives Into Chimerix

Guru adds to health care holdings with biotech focused on cancer, serious diseases

Billionaire investor Steven Cohen (Trades, Portfolio), who leads Point72 Asset Management, disclosed a 5.37% stake in Chimerix Inc. (NASDAQ:CMRX) earlier this week.

The guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide in order to generate superior risk-adjusted returns. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.

According to Real-Time Picks, a Premium feature of GuruFocus, Cohen invested in 3.8 million shares of the Durham, North Carolina-based biotechnology company on Feb. 22, allocating 0.19% of the equity portfolio to the stake. He previously sold out of the stock in the third quarter of 2020. Shares traded for an average price of $9.94 each on the day of the transaction.

While the guru has owned the stock several times before over the past decade, the latest purchase is the largest holding to date.

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Chimerix, which is a development-stage biotech focused on oncology and biodefense therapies, has a $722.14 million market cap; its shares were trading around $9.95 on Wednesday with a price-book ratio of 7.58 and a price-sales ratio of 56.53.

The GF Value line indicates the stock is significantly overvalued currently based on its historical ratios, past performance and projections of future growth.

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In January, Chimerix issued a $100 million public offering of its common stock to fund the development of its product candidates, commercial pre-launch activities and general corporate expenses. It closed on Jan. 25.

The company will announce its fourth-quarter and full-year 2020 earnings before the opening bell on Feb. 25.

GuruFocus rated Chimerix's financial strength 7 out of 10 on the back of a comfortable level of interest coverage and a robust Altman Z-Score of 30.99, which indicates it is in good standing. The Sloan ratio, however, suggests the company has poor earnings quality.

The company's profitability scored a 2 out of 10 rating. Although the operating margin is expanding, Chimerix is being weighed down by negative returns that are beating over half of its competitors. It also has a moderate Piotroski F-Score of 4, indicating business conditions are stable even though revenue per share has been declining over the past 12 months.

While Cohen is now the company's largest guru shareholder, Jim Simons (Trades, Portfolio)' Renaissance Technologies also has a significant position with 4.12% of its outstanding shares.

Portfolio composition

Cohen's $20.5 billion equity portfolio, which was composed of 879 stocks as of the three months ended Dec. 31, is most heavily invested in the technology, health care and consumer cyclical sectors.

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Other biotech companies Cohen added to the portfolio during the fourth quarter of 2020 included Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY), Dicerna Pharmaceuticals Inc. (NASDAQ:DRNA), Mirati Therapeutics Inc. (NASDAQ:MRTX), Galapagos NV (NASDAQ:GLPG), Curis Inc. (NASDAQ:CRIS), Aeglea BioTherapeutics Inc. (NASDAQ:AGLE), Atara Biotherapeutics Inc. (NASDAQ:ATRA), Bellus Health Inc. (NASDAQ:BLU), Black Diamond Therapeutics Inc. (NASDAQ:BDTX), AnaptysBio Inc. (ANAB) and Ultragenyx Pharmaceutical Inc. (RARE).

Disclosure: No positions.

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