Point72 Asset Management’s Steven Cohen (Trades, Portfolio) disclosed Monday that he expanded his Nevro Corp. (NVRO, Financial) stake by 1,760.71%.
The billionaire investor’s Connecticut-based hedge fund uses long, short, macro and systematic strategies to generate superior risk-adjusted returns.
According to GuruFocus real-time picks, Cohen picked up 1.49 million shares of the Redwood City, California-based medical device company for an average price of $56.29 per share. He now holds 1.58 million shares, which represent 0.35% of his equity portfolio.
GuruFocus data shows he has made an estimated gain of 4.38% on the investment since the second quarter of 2015.
The company, which manufactures HF10 and Senza devices to help treat and relieve chronic pain through spinal cord stimulation, has a $1.63 billion market cap; its shares were trading around $53.64 on Thursday morning with a price-book ratio of 6.65 and a price-sales ratio of 4.37.
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According to the median price-sales chart, the stock is trading below its historical value. GuruFocus says the ratio is near a three-year low.
The company reported second-quarter results in August, posting a loss of 35 cents per share on $96.1 million in revenue, which missed consensus estimates. GuruFocus data warns that its revenue per share has been in decline over the last several years.
Supported by a high Altman Z-Score of 5.77, Nevro’s financial strength scored a 6 out of 10 rating from GuruFocus despite seeing an increase in long-term debt. Debt has ballooned from $19.5 million in 2014 to $145 million in 2017.
The company’s profitability and growth was rated 3 out of 10. While its operating margin is expanding, it still underperforms 62% of competitors. Its net margin and returns are also negative and underperform industry peers.
Nevro was sued by Boston Scientific Corp. (BSX, Financial) in December 2016 over alleged patent infringements and several other charges. After the case was settled in July, the company was hit by another class-action lawsuit on Oct. 1 in regard to whether or not its officers and directors have engaged in securities fraud or unlawful business practices.
As a result of these legal issues, GuruFocus estimates the stock has tumbled 22% year to date.
With 5.25% of outstanding shares, Cohen is by far Nevro’s largest guru shareholder. Pioneer Investments (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also hold the stock.
The second-largest sector represented, health care stocks make up 16.36% of Cohen’s $25.05 billion equity portfolio, which is composed of 940 holdings. Other health care companies he has positions in are Gilead Sciences Inc. (GILD, Financial), Bristol-Myers Squibb Co. (BMY), Stryker Corp. (SYK, Financial), Alnylam Pharmaceuticals Inc. (ALNY, Financial) and DexCom Inc. (DXCM, Financial).
Disclosure: No positions.
