Billionaires see opportunity in the healthcare sector. The Motley Fool analyzed 16 billionaire-led hedge funds and found that they devote 10% of their portfolios to healthcare stocks on average.
The top healthcare holdings in those funds are fairly diversified within the sector. Most funds favor leading pharmaceutical companies and round out their top 10 healthcare stocks with a handful of innovative medical device companies, niche biotechnology stocks, and large healthcare providers.
Read on for a deep dive into which healthcare stocks billionaires are investing in.
Methodology
The Motley Fool analyzed 16 hedge funds run by billionaires to determine what the wealthiest investors are buying. The analysis was based on these funds’ 2023 Q4 Forms 13F.
The following funds are included in the analysis:
- Citadel (Ken Griffin)
- Renaissance Technologies (Jim Simons)
- Bridgewater Associates (Ray Dalio)
- Carl Icahn’s Personal Holdings (Carl Icahn)
- BlueCrest Capital Management (Michael Platt)
- Millennium Management (Israel Englander)
- Tiger Global Management (Chase Coleman)
- D.E. Shaw & Co. (David Shaw)
- Tudor Investment Corp. (Paul Tudor Jones)
- Coatue Management (Philippe Laffont)
- Two Sigma Investments (John Overdeck and David Siegel)
- The Children’s Investment Fund (Christopher Hohn)
- Soros Fund Management (George Soros)
- Caxton Associates (Bruce Kovner)
- Viking Global Investors (Andreas Halvorsen)
- Elliott Management (Paul Singer)
The top healthcare stocks billionaires are buying
The top healthcare stocks billionaires are buying
These are the stocks that appear in the top 10 healthcare holdings of more than one of the hedge funds analyzed:
| Stock | Number of Funds Stock Appears in Top 10 Healthcare Holdings | |
|---|---|---|
| Eli Lilly (NYSE:LLY) | 8 | |
| Merck & Co. (NYSE:MRK) | 7 | |
| UnitedHealth Group (NYSE:UNH) | 6 | |
| Intuitive Surgical (NASDAQ:ISRG) | 6 | |
| AbbVie (NYSE:ABBV) | 5 | |
| Cigna Group (NYSE:CI) | 5 | |
| Bristol Myers Squibb (NYSE:BMY) | 4 | |
| Humana (NYSE:HUM) | 4 | |
| Johnson & Johnson (NYSE:JNJ) | 4 | |
| McKesson Corp. (NYSE:MCK) | 4 | |
| Pfizer (NYSE:PFE) | 4 | |
| Boston Scientific Corp. (NYSE:BSX) | 3 | |
| DexCom (NASDAQ:DXCM) | 3 | |
| Illumina (NASDAQ:ILMN) | 3 | |
| Incyte Corp. (NASDAQ:INCY) | 3 | |
| Novo Nordisk (NYSE:NVO) | 3 | |
| Abbott Laboratories (NYSE:ABT) | 2 | |
| Amgen (NASDAQ:AMGN) | 2 | |
| Bausch Health Companies (NYSE:BHC) | 2 | |
| Becton, Dickinson and Company (NYSE:BDX) | 2 | |
| Biomarin Pharmaceutical (NASDAQ:BMRN) | 2 | |
| Cardinal Health (NYSE:CAH) | 2 | |
| Catalent (NYSE:CTLT) | 2 | |
| Cencora (NYSE:COR) | 2 | |
| Regeneron Pharmaceuticals (NASDAQ:REGN) | 2 | |
| United Therapeutics Corporation (NASDAQ:UTHR) | 2 | |
| Vertex Pharmaceuticals (NASDAQ:VRTX) | 2 | |
| West Pharmaceutical Services (NYSE:WST) | 2 |
Eli Lilly, Merck, Intuitive Surgical, and UnitedHealth Group most commonly appear in the top 10 healthcare holdings among the billionaire-led funds analyzed.
The funds are diversified across the healthcare sector and within sectors as well. Pharmaceutical companies appear most often, followed by medical device companies, biotech companies, and healthcare providers.
Among the top pharmaceutical companies most frequently held, billionaires have spread their investments between companies such as Eli Lilly and Novo Nordisk, which produce drugs to treat chronic conditions; Regeneron, which focuses on biologics; Bristol Myers Squibb and Merck, which have leading oncology drugs; and Vertex, which prioritizes drug innovation to treat specific diseases.
Within the medical devices industry, robotic surgery company Intuitive Surgical appears often; as does DexCom, a diabetes management tech company; Boston Scientific, which produces cardiac care devices; and Illumina, which focuses on genetic sequencing and diagnostics.
In the healthcare provider and insurance sector, managed care organizations UnitedHealth Group and Cigna appear most often in hedge funds’ top healthcare stocks. Humana, a health insurance company with a large presence in the Medicare and Medicaid markets, also appears multiple times.
The top healthcare stocks billionaires are investing in by hedge fund
Citadel
The top healthcare stocks held by Citadel
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Eli Lilly | $743,824,573 | 1,276,032 | 0.7% |
| Merck | $688,807,002 | 6,318,171 | 0.7% |
| Humana | $688,153,439 | 1,503,142 | 0.7% |
| Intuitive Surgical | $651,654,360 | 1,931,629 | 0.7% |
| Boston Scientific | $519,222,480 | 8,981,534 | 0.5% |
| Cigna | $462,717,926 | 1,545,226 | 0.5% |
| DexCom | $358,271,264 | 63,070,760 | 0.4% |
| Pfizer | $334,829,831 | 11,630,074 | 0.3% |
| West Pharmaceutical Services | $327,125,466 | 929,017 | 0.3% |
| Becton, Dickinson and Company | $302,626,922 | 1,241,139 | 0.3% |
- Total value of all healthcare investments: $13.1 billion
- Percent of portfolio in healthcare stocks: 13.3%
Diversification guides Ken Griffin’s Citadel’s approach to healthcare stocks. The hedge fund’s top healthcare investments are spread fairly evenly across drugmakers, medical device companies, and health insurance providers. They feature large, established companies that offer stable growth and those on the cutting edge that carry more risk -- and potential upside.
Pharmaceutical giants Eli Lilly and Merck are the fund’s top two healthcare investments. Those offer some stability by providing drugs to treat chronic conditions. Pfizer also features as the fund’s eight-largest healthcare investment.
Citadel’s third-largest and sixth-largest healthcare investments are in health insurance providers Humana and Cigna, respectively.
Five of the fund’s 10 largest healthcare holdings are medical device companies. Its largest medical device investment is in Intuitive Surgical, followed by Boston Scientific. Both of those companies are known for making advanced surgical technology, a sub-sector that enjoys high barriers to entry and relatively strong margins.
Citadel has exposure to the medical device market for diabetes patients through DexCom, which makes glucose monitoring systems.
Its other two top medical device investments are in West Pharmaceutical Services and Becton, Dickinson and Company. Both companies make drug delivery systems, although Becton, Dickinson has a broader portfolio.
Renaissance Technologies
The top healthcare stocks held by Renaissance Technologies
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Novo Nordisk | $1,432,714,000 | 13,849,335 | 2.2% |
| Vertex Pharmaceuticals | $647,642,000 | 1,591,688 | 1.0% |
| United Therapeutics | $477,208,000 | 2,170,214 | 0.7% |
| Gilead Sciences (NASDAQ:GILD) | $451,700,000 | 5,575,850 | 0.7% |
| Exelixis (NASDAQ:EXEL) | $374,621,000 | 15,615,716 | 0.6% |
| Incyte | $348,732,000 | 5,553,937 | 0.5% |
| AbbVie | $309,430,000 | 1,996,711 | 0.5% |
| Molina Healthcare (NYSE:MOH) | $298,419,000 | 825,937 | 0.5% |
| Hologic (NASDAQ:HOLX) | $286,936,000 | 4,015,902 | 0.4% |
| Novartis (NYSE:NVS) | $286,561,00 | 2,838,082 | 0.4% |
- Total value of all healthcare investments: $11 billion
- Percent of portfolio in healthcare stocks: 17%
Jim Simons’ Renaissance Technology’s top healthcare investments are more aggressive than other funds, and healthcare stocks make up a larger percentage of the fund’s portfolio than most others analyzed.
The portfolio tilts toward drug and biologic makers with attractive upside but come with risk from development challenges, regulatory requirements, uncertain clinical trial outcomes, and market adoption rates that are not guaranteed.
Novo Nordisk, the company behind Ozempic, tops Renaissance Technology’s healthcare investments and is among the fund’s top investments overall, accounting for 2.2% of its entire portfolio.
The fund’s second-largest investment is in Vertex Pharmaceuticals, a leader in treatments for cystic fibrosis. Vertex is partnering with CRISPR Therapeutics (NASDAQ:CRSP) on treatments for other conditions.
Following those two drugmakers are five relatively specialized biopharmaceutical companies:
- United Therapeutics, which focuses on treatments for pulmonary arterial hypertension.
- Gilead Sciences, which emphasizes antivirals for patients with HIV, hepatitis B and C, and the flu.
- Exelixis, which focuses on drugs to respond to hard-to-treat cancers.
- Incyte, which targets treatments for rare diseases, including myelofibrosis and polycythemia vera.
- AbbVie, which produces a range of drugs to treat various conditions.
Molina is the only healthcare services stock in Renaissance’s top 10 healthcare investments. The company primarily caters to those on Medicaid.
Hologic, a medical technology company focused on women’s health, and Novartis, a large drugmaker with a substantial presence in generics, round out Renaissance’s top 10 healthcare stocks.
Bridgewater Associates
The top healthcare stocks held by Bridgewater Associates
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Johnson & Johnson | $434,904,440 | 2,774,687 | 2.4% |
| Merck | $213,358,899 | 1,957,062 | 1.2% |
| Abbott | $208,826,895 | 1,897,219 | 1.2% |
| Eli Lilly | $185,127,231 | 317,586 | 1.0% |
| McKesson | $155,220,990 | 335,265 | 0.9% |
| Intuitive Surgical | $141,365,648 | 419,035 | 0.8% |
| Stryker Corporation (NYSE:SYK) | $121,295,674 | 405,048 | 0.7% |
| HCA Healthcare (NYSE:HCA) | $115,384,388 | 426,276 | 0.6% |
| Cigna | $111,901,471 | 373,690 | 0.6% |
| Boston Scientific | $101,601,769 | 1,757,512 | 0.6% |
- Total value of all healthcare investments: $3.3 billion
- Percent of portfolio in healthcare stocks: 18.6%
Bridgewater's top healthcare holdings are a balanced group with exposure across the industry. The fund’s largest healthcare investments tilt toward proven industry leaders but does include more niche picks focused on innovation in the medical technology space.
Johnson & Johnson takes up a decent chunk of the fund’s healthcare portfolio -- and 2.4% of the fund’s holdings overall. Ray Dalio’s next largest healthcare investments are in key healthcare players with sizable market shares and consistent revenue streams: Merck, Abbott, Eli Lilly, and McKesson.
The fund is invested in a handful of innovative medical device companies: Intuitive Surgical, Stryker, and Boston Scientific. Those stocks may offer more upside -- and more risk -- than the larger industry leaders that make up the fund’s top five holdings.
To offer additional diversification and resilience to volatility, Bridgewater features two healthcare service providers in its top 10 healthcare holdings: HCA Healthcare, which primarily offers direct care, and Cigna, which offers healthcare through its insurance network.
Carl Icahn
The top healthcare stocks held by Carl Icahn
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Bausch Health | $278,463 | 34,721,118 | 2.6% |
| Illumina | $59,873 | 430,000 | 0.5% |
- Total value of all healthcare investments: $.338 billion
- Percent of portfolio in healthcare stocks: 3.1%
Carl Icahn’s personal holdings include just two healthcare stocks: Bausch Health and Illumina.
His much larger stake in Bausch moderates his approach to healthcare investments. The company is a known player in the drugmaking industry and offers some stability despite recent restructuring.
The investment in Illumina could provide more upside. It’s a leader in genomic analysis, for which demand should grow as medicine becomes more personalized, but it does face competitive pressure.
BlueCrest Capital Management
The top healthcare stocks held by BlueCrest Capital Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Pfizer | $14,996,625 | 520,897 | 2.5% |
| Repligen Corporation (NASDAQ:RGEN) | $5,613,325 | 5,000,000 | 0.9% |
| UnitedHealth Group | $5,542,676 | 10,528 | 0.9% |
| Johnson & Johnson | $5,360,195 | 34,198 | 0.9% |
| Eli Lilly | $3,554,646 | 6,098 | 0.6% |
| Bristol Myers Squibb | $3,030,625 | 59,065 | 0.5% |
| Merck | $2,622,367 | 24,054 | 0.4% |
| Barinthus Biotherapeutics (NASDAQ:BRNS) | $2,002,463 | 542,673 | 0.3% |
| AbbVie | $1,611,688 | 10,400 | 0.3% |
| Abbott Laboratories | $1,215,173 | 11,040 | 0.2% |
- Total value of all healthcare investments: $.049 billion
- Percent of portfolio in healthcare stocks: 8.2%
Michael Platt’s BlueCrest uses a sizable investment in Pfizer, alongside smaller investments in resilient pharmaceutical and healthcare leaders, to anchor its capital allocated to higher upside, higher-risk biotech companies.
Those two biotech companies are Repligen Corporation and Barinthus Biotherapeutics. They occupy different parts of the biotech industry and are at different stages of growth.
- Repligen, founded in 1981, is a bioprocessing company that supplies biologic companies with critical inputs such as proteins and antibodies.
- Barinthus, founded in 2016, is developing antigen-specific immunotherapies for cancers, autoimmune diseases, and infectious diseases. The company has three clinical trials ongoing as of January 2024.
Outside of those two biotech stocks, BlueCrest’s top healthcare investments are in established companies.
Millennium Management
The top healthcare stocks held by Millennium Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Merck | $659,347,727 | 6,047,952 | 0.6% |
| Eli Lilly | $439,934,387 | 754,708 | 0.4% |
| Intuitive Surgical | $412,773,117 | 1,223,539 | 0.4% |
| Cigna | $403,597,213 | 1,347,795 | 0.4% |
| Boston Scientific | $397,055,209 | 7,368,279 | 0.4% |
| Humana | $380,858,548 | 831,914 | 0.4% |
| Elevance Health (NYSE:ELV) | $357,436,350 | 757,987 | 0.3% |
| Medtronic (NYSE:MDT) | $346,382,527 | 4,204,692 | 0.3% |
| Pfizer | $274,526,556 | 9,535,483 | 0.3% |
| McKesson | $272,663,274 | 588,931 | 0.3% |
- Total value of all healthcare investments: $12.1 billion
- Percent of portfolio in healthcare stocks: 11.5%
Israel Englander’s Millennium Management has taken a balanced approach to its healthcare portfolio. Its top healthcare investments span the industry and are spread among industry leaders.
The fund’s top two holdings are established pharmaceutical leaders Merck and Eli Lilly. Pfizer also features in its largest healthcare investments. Those companies have relatively reliable revenue streams and strong drug pipelines, which offer the fund upside.
Millennium has staked out positions in three medical device companies in its top 10 healthcare stocks: Intuitive Surgical, Boston Scientific, and Medtronic.
Cigna, Humana, and Elevance offer exposure to the growing health insurance industry. Those choices may hedge against the riskier drug and medical technology companies in Millennium's top 10.
Tiger Global Management
The top healthcare stocks held by Tiger Global Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Eli Lilly | $518,798,800 | 890,000 | 3.7% |
| DexCom | $143,051,697 | 1,152,806 | 1.0% |
- Total value of all healthcare investments: $.661 billion
- Percent of portfolio in healthcare stocks: 4.7%
Chase Coleman’s Tiger Global Management holds just two healthcare stocks: Eli Lilly and DexCom.
Eli Lilly accounts for 3.7% of its entire portfolio, a signal that the fund is bullish on the drugmaker and believes that it will continue to develop new treatments. DexCom is a leader in glucose monitoring systems to help patients manage diabetes.
Taken together, Tiger has invested in healthcare companies that operate in areas with expected demand and growth. Still, the fund’s healthcare holdings lack the diversity common in other hedge funds.
D.E. Shaw & Co.
The top healthcare stocks held by D.E. Shaw & Co.
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Pfizer | $418,087,977 | 14,521,986 | 0.6% |
| Regeneron | $319,748,501 | 364,058 | 0.5% |
| Merck | $266,273,719 | 2,442,430 | 0.4% |
| Bristol Myers Squibb | $225,569,381 | 4,396,207 | 0.3% |
| Johnson & Johnson | $223,918,137 | 1,428,596 | 0.3% |
| UnitedHealth Group | $203,820,228 | 387,145 | 0.3% |
| Eli Lilly | $170,171,835 | 291,930 | 0.2% |
| AbbVie | $165,159,897 | 1,065,754 | 0.2% |
| Amgen | $160,067,691 | 555,752 | 0.2% |
| Intuitive Surgical | $135,328,591 | 401,140 | 0.2% |
- Total value of all healthcare investments: $6.3 billion
- Percent of portfolio in healthcare stocks: 9.2%
David Shaw’s hedge fund, D.E. Shaw & Co. takes a balanced approach to healthcare stocks, leaning its investments toward large, established pharmaceutical companies while putting cash into two more innovative biotech companies.
The fund’s investments in Pfizer, Merck, Bristol Myers Squibb, Johnson & Johnson, Eli Lilly, and AbbVie is a bet on consistent revenue and drug innovation in areas where high demand exists. Its investment in UnitedHealth Group is another stable pick.
Shaw’s biotech choices are Regeneron, its second largest healthcare investment, and Amgen. The former focuses on therapeutics for ophthalmology, oncology, and rare diseases, while Amgen has treatments for bone health, cardiovascular diseases, and cancer.
Tudor Investment Corp.
The top healthcare stocks held by Tudor Investment Corp.
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Bristol Myers Squibb | $39,377,911 | 767,451 | 0.5% |
| Cigna | $32,964,055 | 110,082 | 0.5% |
| McKesson | $31,952,565 | 69,015 | 0.4% |
| Humana | $28,179,121 | 61,552 | 0.4% |
| UnitedHealth Group | $27,056,873 | 51,393 | 0.4% |
| Novo Nordisk | $21,983,746 | 212,506 | 0.3% |
| ResMed (NYSE:RMD) | $21,258,232 | 123,580 | 0.3% |
| Becton, Dickinson and Company | $21,235,886 | 87,093 | 0.3% |
| Cardinal Health | $20,283,278 | 201,223 | 0.3% |
| West Pharmaceutical Services | $19,117,651 | 54,293 | 0.3% |
- Total value of all healthcare investments: $.717 billion
- Percent of portfolio in healthcare stocks: 9.9%
Paul Tudor Jones’ Tudor Investment Corp. has spread its top 10 healthcare holdings across the sector.
The fund is placing its drugmaking bets on Bristol Myers Squibb and Novo Nordisk, both of which have strong existing revenue streams and new drug pipelines.
Cigna, Hamana, UnitedHealth Group, Cardinal Health, and McKesson give Tudor diversified exposure to the healthcare system via healthcare providers and the sector’s supply chain.
ResMed, Becton, and West Pharmaceutical Services produce different medical devices.
Overall, the fund’s healthcare strategy aims for stability alongside growth.
Coatue Management
The top healthcare stocks held by Coatue Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Intuitive Surgical | $439,106,089 | 1,301,595 | 1.8% |
| Moderna (NASDAQ:MRNA) | $325,505,021 | 3,273,052 | 1.4% |
| UnitedHealth Group | $279,231,264 | 530,384 | 1.2% |
| Eli Lilly | $124,360,153 | 213,340 | 0.5% |
| Illumina | $119,285,376 | 856,689 | 0.5% |
| Novo Nordisk | $32,174,088 | 311,011 | 0.1% |
| Novavax (NASDAQ:NVAX) | $7,294,051 | 1,519,594 | <0.1% |
| Novocure Limited (NASDAQ:NVCR) | $5,197,417 | 348,119 | <0.1% |
- Total value of all healthcare investments: $1.3 billion
- Percent of portfolio in healthcare stocks: 5.6%
Philippe Laffont’s Coatue Management has an aggressive healthcare portfolio. Its top investment, Intuitive Surgical, is a bet on robot-assisted surgeries, a relatively new technique.
Its second-largest investment is in Moderna, which is best-known for its work on mRNA technology that directly contributed to its COVID-19 vaccine success. That vaccine is the company’s only commercial product. Coatue’s investment is a gamble that some of the 38 other drugs in clinical trials developed by Moderna will pan out and pay off.
Novavax and Novocure are two other biotech companies featured in Coatue’s top healthcare holdings. Novavax also developed a COVID-19 vaccine and partnered to develop a malaria vaccine, which has received approval. Novocure develops cancer treatments, focusing on combating tumors. It has one FDA-approved product to slow or stop glioblastoma and a number of other products in clinical trials.
Illumina, a key player in genomic sequencing, rounds out Coatue’s health tech investments among its top healthcare holdings.
Coatue holds larger, less-risky healthcare stocks to balance its portfolio. That includes two drugmakers, Eli Lilly and Novo Nordisk, and the health insurance giant UnitedHealth Group.
Two Sigma Investments
The top healthcare stocks held by Two Sigma Investments
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Bristol Myers Squibb | $251,298,729 | 4,897,656 | 0.6% |
| Merk | $242,844,121 | 2,227,519 | 0.6% |
| UnitedHealth Group | $232,360,167 | 441,355 | 0.6% |
| Humana | $206,443,468 | 450,937 | 0.5% |
| Johnson & Johnson | $160,320,255 | 1,022,842 | 0.4% |
| AstraZeneca (NASDAQ:AZN) | $158,576,653 | 2,354,516 | 0.4% |
| Cencora | $136,570,512 | 664,965 | 0.3% |
| AbbVie | $130,435,305 | 841,681 | 0.3% |
| Incyte | $120,041,106 | 1,911,787 | 0.3% |
| Edwards Lifesciences Corp. (NYSE:EW) | $88,604,788 | 1,162,030 | 0.2% |
- Total value of all healthcare investments: $3.6 billion
- Percent of portfolio in healthcare stocks: 8.8%
Led by billionaires John Overdeck and David Siegel, Two Sigma has taken a moderate approach to its top healthcare investments. The fund tilts toward large industry leaders to complement a handful of biotech and niche medical device companies, which offer more variability.
The fund has opted for established players for its eight largest healthcare investments: six drugmakers and two healthcare service providers.
The more specialized stocks in its top healthcare investments are:
- Incyte, which has drugs on the market to treat cancer and autoimmune diseases, in addition to a dermatology product. The company has a number of drugs in clinical trials or in proof of concept in those areas.
- Edwards Lifesciences, which produces medical devices for heart disease and critical care monitoring.
Soros Fund Management
The top healthcare stocks held by Soros Fund Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Merck | $24,529,500 | 225,000 | 0.9% |
| Neurocrine Biosciences (NASDAQ:NBIX) | $24,375,600 | 185,000 | 0.9% |
| Eli Lilly | $19,236,360 | 33,000 | 0.7% |
| Sanofi SA (NASDAQ:SNY) | $16,162,250 | 325,000 | 0.6% |
| Regeneron Pharmaceuticals | $15,370,075 | 17,500 | 0.6% |
| Illumina | $13,924,000 | 100,000 | 0.5% |
| DexCom | $13,649,900 | 110,000 | 0.5% |
| Cigna | $13,475,250 | 45,000 | 0.5% |
| Natera (NASDAQ:NTRA) | $9,396,000 | 150,000 | 0.3% |
| Moonlake Immunotherapeutics (NASDAQ:MLTX) | $6,039,000 | 100,000 | 0.2% |
- Total value of all healthcare investments: $0.185 billion
- Percent of portfolio in healthcare stocks: 6.7%
George Soros' hedge fund is moderately aggressive. It uses relatively large investments in safer drugmakers -- such as Merck, Eli Lilly, and Sanofi SA -- to balance stakes in higher-risk biotech and emerging medical device companies.
Those riskier companies include:
- Neurocrine Biosciences, which develops treatments for neurological conditions. The company’s flagship product is Ingrezza, which treats tardive dyskinesia, and it has drugs in the pipeline targeting Parkinson’s and other neurological diseases.
- Natera is a key player in non-invasive genetic testing and screening, including prenatal testing and cancer diagnostics.
- Moonlake Immunotherapeutics is a clinical-stage biopharmaceutical company that aims to treat inflammatory diseases with proprietary technology.
To diversify its healthcare holdings and add a bit more safety, Soros Fund Management also holds healthcare leader Cigna in its top 10.
Caxton Associates
The top healthcare stocks held by Caxton Associates
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| Vertex Pharmaceuticals | $31,250,373 | 76,803 | 1.6% |
| Catalent | $18,870,600 | 420,000 | 1.0% |
| Biogen | $11,644,650 | 45,000 | 0.6% |
| United Therapeutics Corporation (NASDAQ:UTHR) | $6,596,700 | 30,000 | 0.3% |
| AbbVie | $4,338,850 | 27,998 | 0.2% |
| Cencora | $4,296,139 | 20,918 | 0.2% |
| Amgen | $3,824,618 | 13,279 | 0.2% |
| Henry Schein (NASDAQ:HSIC) | $3,083,214 | 40,724 | 0.2% |
| Relay Therapeutics (NASDAQ:RLAY) | $3,072,902 | 279,101 | 0.2% |
| Incyte | $3,002,429 | 47,817 | 0.2% |
- Total value of all healthcare investments: $0.128 billion
- Percent of portfolio in healthcare stocks: 6.6%
Bruce Kovner’s Caxton Associates is another fund that takes a moderately aggressive approach to its healthcare investments. Its top healthcare investment -- good for 1.6% of the fund’s total holdings -- is Vertex Pharmaceuticals, a big spender on R&D that, so far, has a relatively narrow approved product line focused on treating cystic fibrosis and sickle cell disease.
Caxton has also bet on Relay Therapeutics and Biogen -- two other innovative but risky companies -- to provide growth. United Therapeutics is another focused treatment play and specializes in treatments for pulmonary arterial hypertension.
The fund balances those holdings with investments in more established companies, such as AbbVie and Amgen, in addition to investments in less-risky healthcare product suppliers, such as Henry Schein and Catalent.
Viking Global Investors
The top healthcare stocks held by Viking Global Investors
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| McKesson Corporation | $1,033,929,251 | 2,233,205 | 3.8% |
| BridgeBio Pharma (NASDAQ:BBIO) | $1,014,134,407 | 25,120,991 | 3.7% |
| Roivant Sciences (NASDAQ:ROIV) | $779,013,432 | 69,368,961 | 2.9% |
| BioMarin Pharmaceutical (NASDAQ:BMRN) | $471,441,155 | 4,889,454 | 1.7% |
| Intuitive Surgical | $314,245,442 | 931,484 | 1.2% |
| Royalty Pharma (NASDAQ:RPRX) | $283,355,544 | 10,087,417 | 1.0% |
| Inhibrx (NASDAQ:INBX) | $271,731,388 | 7,150,826 | 1.0% |
| UnitedHealth Group | $242,587,900 | 460,782 | 0.9% |
| Ginkgo Bioworks Holdings (NYSE:DNA) | $241,813,863 | 143,085,126 | 0.9% |
| Acadia Healthcare (NASDAQ:ACHC) | $217,755,216 | 2,800,350 | 0.8% |
- Total value of all healthcare investments: $6.1 billion
- Percent of portfolio in healthcare stocks: 22.6%
Andreas Halvorsen’s Viking Global Investors devotes more than one-fifth of its portfolio to healthcare stocks, and its top investments in that sector are aggressive.
BridgeBio Pharma, Roivant Sciences, BioMarin Pharmaceuticals, Inhibrx, and Ginkgo Bioworks are high-risk, high-reward plays with prospects to be determined by the outcomes of clinical trials and regulatory approvals.
Intuitive Surgical is another somewhat risky bet on further adoption of robotic-assisted surgical systems, although it's a less speculative play than the stakes Viking Global has taken in early-stage biotech companies.
Viking Global has some balance in its top healthcare holdings through investments in McKesson, a leader in wholesale medical supplies; Royalty Pharma, which invests in drug royalties; UnitedHealth Group; and Acadia Healthcare, which operates behavioral healthcare facilities.
Elliott Management
The top healthcare stocks held by Elliott Management
| Stock | Value of Shares | Total Shares | Percent of Portfolio |
|---|---|---|---|
| BioMarin Pharmaceutical | $289,292,590 | 3,000,338 | 3.2% |
| Cardinal Health | $201,600,000 | 2,000,000 | 2.2% |
| Catalent | $179,720,000 | 4,000,000 | 2.0% |
| Teledoc Health (NYSE:TDOC) | $8,218,346 | 10,000,000 | 0.1% |
| CorMedix (NASDAQ:CRMD) | $5,829,966 | 1,550,523 | 0.1% |
| Bausch Health Companies | $92,278 | 11,500 | 0.0% |
- Total value of all healthcare investments: $.684 billion
- Percent of portfolio in healthcare stocks: 7.5%
Elliott Management, led by Paul Singer, has a moderately aggressive healthcare portfolio, characterized by established companies offering stability for more speculative investments.
Cardinal Health, a healthcare provider, Catalent, a service provider to drugmakers, and Bausch, an established drugmaker, provide some diversification and stability to the fund’s healthcare portfolio.
That creates some buffer for riskier, higher-upside investments. Those include BioMarin Pharmaceutical, which is the fund’s top healthcare holding and accounts for 3.2% of Elliott’s entire portfolio. The company often racks up high development costs for specialized drugs, which, when successful, gives it lucrative pricing power.
CorMedix is another more speculative early-stage investment. The company won FDA approval in late 2023 for a drug to treat catheter-related bloodstream infections and is in the preclinical stages for development of other treatments that use the main ingredient in that approved drug.
Teledoc Health is another riskier bet by Elliott Management. The company saw incredible growth during the COVID-19 pandemic when demand for telehealth skyrocketed. But it now faces regulatory challenges, competitors, and less demand.
How to invest in healthcare stocks like a billionaire
Healthcare is a diverse and dizzying sector. It offers investors dividend-paying, stable businesses and highly speculative, cutting-edge companies. The sector includes different types of drug manufacturing, discovery, medical device innovation, robotics, and genetics, on top of healthcare providers and logistics.
Looking at how billionaires approach the healthcare industry can provide some guidance for the everyday investor. Here’s how they manage their portfolios to blend safety and speculation:
- Diversify drugmakers: Most funds include more stable, established drugmakers as well as more speculative, early-stage biotech companies in their top healthcare investments. This approach provides two avenues for growth, innovation, and multiple opportunities to cash in on a new, revolutionary drug.
- Spot R&D and niche plays: Companies that treat rare diseases, produce one of the only products to treat a disease on the market, or build difficult to replicate medical technology offer investors access to markets with high barriers to entry and potentially high margins.
- Use healthcare providers as a foundation: Most billionaires include healthcare providers in their portfolios to balance riskier investments. Those companies tend to have recurring revenue streams and provide resilience against market downturns.
