Keryx Biopharmaceuticals Inc Hearing strength attributed to positive financial blog comments {http://bit.ly/1ma36ZI}
Keryx Biopharmaceuticals: Baupost Group's New Position Suggests A Possible Takeout And 100%+ Gains
Summary
•In 1Q 2014, top hedge fund Baupost Group started a position in KERX and is now its largest shareholder.
•Two weeks ago, Idenix announced it's getting acquired by Merck for over three times its share price. Baupost Group owns 35% of Idenix outstanding shares.
•Worldwide, Keryx's drug Zerenex will likely become the best treatment for chronic kidney disease (CKD) dialysis and pre-dialysis patients.
•If Zerenex is widely used for dialysis and pre-dialysis CKD patients, KERX's value is $60+ using PropThink's model.
•In January 2014, Zerenex got approved in Japan for pre-dialysis and dialysis use in CKD patients.
In this bullish market, it is good to own at least one stock in your portfolio with takeout potential and a possible 100%+ return. There is a good chance that this could happen with Keryx Biopharmaceuticals (KERX). The reason is because Baupost Group, of Idenix (IDIX) fame, has recently acquired an over 10% stake in KERX and has become its largest shareholder.
As explained by Market Realist, Seth Klarman of Baupost Group is one of the best performing hedge fund managers of all time, generating $21.5B in returns over its history. If Warren Buffett announced that he's taking a big position in KERX, then the stock would instantly shoot up, right? Except Buffett doesn't invest in biotech, that isn't his specialty. However, Seth Klarman does and is like the "Buffett of biotech" and unknown to most investors. He takes huge positions in only a select few stocks with a big margin of safety, and has had tremendous success.
Baupost Group's largest position increase in 1Q 2014 was IDIX. By the end of the quarter, Baupost Group owned a whopping 35% of the outstanding shares in IDIX. This kind of large ownership in a stock is very rare for a hedge fund. Maybe he knew something that us mere mortal investors didn't know? Yes, he emphatically did! On June 6th, IDIX closed at $7.23 per share. On June 9th, Merck announced it agreed to buy IDIX for $3.85B, and the stock closed at $23.79, for a 230% gain. Something similar could happen to KERX any day. KERX is a plausible takeover candidate for its phosphate binder drug, Zerenex, to treat chronic kidney disease (CKD). Zerenex is a unique, and very valuable chemical compound. It is comparable to Idenix's nucleotides that are also unique and valuable compounds to treat Hepatitis C.
Baupost always seems to know how to be in the right place at the right time. The firm also initiated a large 6 million share position in Cheniere energy in 1Q 2014, which has already increased over 15% since then. Also, TriQuint Semiconductor (TQNT) and RF Micro Devices (RFMD) are both up almost 100% since Baupost initiated the positions in 1Q 2014. Those and KERX were the only four positions Baupost initiated in 1Q 2014.
The following were Baupost's top holdings in 1Q 2014: