In Carl Icahn’s most recent 13K filing, the activist hedge fund manager reported a 100% decrease in his holding of Amylin Pharmaceuticals LLC (NASDAQ: AMLN), which was recently acquired by Bristol Myers Squibb Co. (NYSE: BMY), along with a 16% increase in his holdings of Forest Laboratories (NYSE: FRX) and no change in his holdings of both small cap biotech Enzon Pharmaceuticals (NASDAQ: ENZN) and health info provider WebMD Health Corp. (NASDAQ: WBMD). That’s worth noting by biotech and pharma investors alike as Icahn is well known for investing in companies and then either trying to acquire or shake things up. But does that mean you should following Icahn into these stocks?
Beginning with Forest Laboratories (NYSE: FRX), it develops, manufactures and sells branded forms of ethical drug products that will often require a physician's prescription. Forest Laboratories was Carl Icahn’s third biggest position in the 13K filing as he held 30,662,005 shares out of a total of 266 million shares for the stock. However, Carl Icahn has also been a critic of Forest Laboratories – calling it ill-prepared to generate new growth as its top products face increased competition. Last August after a bitter proxy fight, Icahn secured one of the four board seats he was seeking. Wall Street analysts are also rather mixed on Forest Laboratories with Mizuho recently initiating coverage on with a “buy” rating and a $45.00 price target while Zacks reiterated a “neutral” rating with a $36 price target, Morgan Stanley cut its EPS estimates to give it an “equal weight” rating with a $35.00 price target and Needham & Company reiterated a “hold” rating. On Tuesday, Forest Laboratories rose 0.09% to $33.52 (FRX has a 52 week trading range of $28.47 to $37.70 a share) for a market cap of $8.92 billion plus the stock is up 10.8% since the start of the year and down 8.8% over the past five years.
Meanwhile, small cap Enzon Pharmaceuticals (NASDAQ: ENZN) is dedicated to the research and development of innovative therapeutics for cancer patients with high unmet medical needs. In his latest 13K, Carl Icahn reported owning 5,904,863 shares out of a total of around 44.4 million shares. Back in October, Enzon Pharmaceuticals reported that it swung into a third-quarter profit - its first profit in the last six quarters thanks to an effort to considerably reduce operating expenses. Enzon Pharmaceuticals also reported having total cash reserves of $288.7 million as of September 30, 2012 verses $323.3 million as of December 31, 2011 with the decrease primarily attributable to the resumption of a share repurchase program along with the repurchase of outstanding notes payable. On Tuesday, Enzon Pharmaceuticals rose 0.47% to 46.39 (ENZN has a 52 week trading range of $5.78 to $7.87 a share) for a market cap of $283.83 million plus the stock is down 4.6% since the start of the year and down 34.1% over the past five years.
Finally, small cap WebMD Health Corp. (NASDAQ: WBMD) is a provider of health information services to consumers, healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. Late last year, WebMD Health was forced to adopt a poison pill after Carl Icahn made a filing with the SEC revealing he was pushing the company to spend up to $1 billion to buy back its stock through a Dutch tender offer. Icahn is also the largest shareholder in WebMD Health with around 13% stake or 6,700,525 shares out of a total of 50 million shares and he believes the company is undervalued from a long-term perspective. At the beginning of November, WebMD Health’s earning report beat expectations but investors got sick in a double-digit selloff as the company’s CEO said he expects its challenges to continue into at least the first half of 2013. However, management is continuing to work on making cost reductions and invest in future growth. On Tuesday, WebMD Health fell 1.16% to $13.65 (WBMD has a 52 week trading range of $13.13 to $40.24 a share) for a market cap of $684.19 million plus the stock is down 63.6% since the start of the year and down 68% over the past five years.
The Bottom Line. Investors should never blindly follow activist investor Carl Icahn or any other well known investor into the stocks they own but at the very least, pharma and biotech stocks Forest Laboratories, Enzon Pharmaceuticals and WebMD Health Corp. should be kept an eye on.