The Vanguard Health Care Fund (Trades, Portfolio) invests in domestic and foreign companies in various aspects of the healthcare industry, such as pharmaceuticals, medical supply, and research companies. Compared to other health care funds, Vanguard tends to be more conservatively positioned and more geographically diverse.
Over the past 10 years, Vanguard has had an average annual return of 12.69%, compared to 9.41% for the Spliced Health Care Index.
As of Dec. 31, the fund had 90 stocks in its portfolio, with more than $44 billion in assets under management.
During the fourth quarter, the fund purchased four new positions, two of which went public toward the end of 2014.
AthenaHealth (ATHN, Financial)
Vanguard purchased 715,400 shares of AthenaHealth during the quarter for an average price of $125.57 per share. The holding accounts for 0.24% of the portfolio.
AthenaHealth provides cloud-based billing and operation services for healthcare providers to improve efficiency and boost revenues. The company estimates its clients on average see a 6% increase in collections, an 8% decrease in no-shows, and the top quartile documentation time is 3.4 minutes.
Over the past year, the stock has been up 2% and is overvalued when compared to the Peter Lynch earnings line.
AthenaHealth has been struggling with its profitability in recent years. Returns on equity, assets, and capital have all been in decline since FY 2011.
On the balance sheet, the current ratio is a comfortable 1.16, but the company has also taken on new long-term debt in FY 2013 at $173.8 million.
Other gurus who own AthenaHealth stock include Louis Moore Bacon (Trades, Portfolio), Frank Sands (Trades, Portfolio), and Ron Baron (Trades, Portfolio).
The fund purchased 3,784,600 shares in VWR at an average price of $23.76 per share.
VWR distributes laboratory supplies such as chemicals, glassware, instruments, and protective clothing, which it acquires from its branded and private-label supplies, as well as its internal manufacturing operations. The company competes with Thermo Fisher Scientific (TMO) and Sigma-Aldrich (SIAL).
VWR’s IPO launched in October, raising $616.6 million after the underwriters exercised their over-allotment option.
Keysight Technologies (KEYS, Financial)
Vanguard purchased 2,812,100 shares of Keysight during the quarter for an average price of $32.06 per share. The company accounts for 0.22% of the portfolio.
Keysight is a leading electronic measurement company that aims to provide innovations in wireless, modular, and software solutions. The company spun off from Agilent Technologies and began trading under the stock ticker KEYS in November.
Since then, the stock has been up 23%.
Agios Pharmaceuticals (AGIO, Financial)
The last new holding during the quarter is 312,200 shares of Agios at an average of $88.42 per share.
Agios Pharmaceuticals is a leader in the field of cellular metabolism to treat cancer and rare genetic disorders of metabolism. Over the past year, the stock has been up 281%.
Last month, Agios announced that its collaboration partner Celgene Corp (CELG) would exercise its option to obtain an exclusive license for AG-120, an inhibitor of the mutant IDH1 protein, outside the U.S. This would make AG-120 available to patients globally, while Agios will retain the U.S. commercialization rights.
Agios’ negative operating margin is indicative of the industry it operates in, though the margin for the trailing 12 months is an improvement from FY 2013.
Jim Simons (Trades, Portfolio) also holds a stake in Agios, while Steven Cohen (Trades, Portfolio) sold out of his position in the third quarter.
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