Hedge Fund Managers Are Aggressively Buying Biotech Stocks Despite Trump Hinting at Pharma Tariffs

Since US President Donald Trump announced his sweeping tariff policies on 3rd April, the US stock market indexes have declined sharply, wiping out trillions of dollars of investor money. The deteriorating trade war faces more unpredictability as the tariffs go into effect today, and Trump increased the surcharge on China imports to 104% in response to the mainland's reciprocal tariffs.

The CBOE volatility index (VIX) reached dangerous levels of above 60 this week and remains above 50, signalling extreme fear and panic among investors. Amid the massive sell-off in US equities, hedge fund managers are reshuffling their portfolios to reduce risk exposure stemming from Trump's economic policies.

Trump's exemption of pharma from the reciprocal tariffs limited the declines in biopharma stocks as other industries tanked. However, he clarified at Tuesday's fundraising gala for House Republicans that the Administration will soon announce tariffs on pharmaceuticals, on expectations that 'they're going to come rushing back into our country because we're the big market.'

William Blair analyst Richard de Chazal recently said that some biopharma giants have announced plans to build new US manufacturing facilities. However, the prospect of future industry-specific tariffs could intensify selling pressure on biotech stocks.

Despite the uncertainty, top hedge fund managers have invested millions of dollars in biotech and pharmaceutical firms over the past week.

Steve Cohen Invests in Regulus Therapeutics

Point72 Asset Management chief and New York Mets owner Steve Cohen revealed that he increased his stake in Regulus Therapeutics (NASDAQ:RGLS) by 338.35% in an 8th April 13G filing with the US Securities and Exchange Commission (SEC). The hedge fund bought 3.03 million shares of the firm to own 3.92 million shares worth £4.89 million ($6.27 million), based on yesterday's closing price of £1.25 ($1.60). The biotech firm develops medicine targeting microRNAs to treat diverse diseases.

EcoR1 Capital Goes Heavy on Zymeworks

EcoR1 Capital's Oleg Nodelman increased its stake in biotech firm Zymeworks (NASDAQ:ZYME) by 2.67 million shares, according to an 8th April 13G filing. The hedge fund now owns 17.69 million shares worth £136.97 million ($175.4 million) as of yesterday's closing price of £7.74 ($9.91). Zymeworks develops protein therapeutics using its molecular modelling software for cancer treatment and autoimmune and inflammatory diseases.

Baker Bros Advisors Buys Celcuity Shares

Julian Baker of Baker Bros Advisors bought 1.58 million shares of clinical-stage biotechnology firm Celcuity (NASDAQ:CELC), according to a 7th April 13G filing with the SEC. The fund now owns 4.25 million company shares worth £28.07 million ($35.95 million) based on Tuesday's close of £6.41 ($8.21). Celcuity is involved in the discovery of oncogenic pathways to develop drugs for cancer treatment.

Ra Capital's Peter Kolchinsky Opens New Position in Sutro Biopharma

Peter Kolchinsky of Ra Capital Management added Sutro Biopharma (NASDAQ:STRO) to the hedge fund's £5.86 billion ($7.51 billion) portfolio, according to a 4th April 13G SEC filing. The fund bought 4.43 million shares of the biotech firm worth £2.21 million ($2.83 million), based on Tuesday's closing price of £0.50 ($0.64). Sutro Biopharma focuses on clinical-stage drug discovery, development, and manufacturing.

Israel Englander Backs Genome Sequencing Company

Millennium Management's Israel Englander purchased 4.54 million shares of 10X Genomics (NASDAQ:TXG) to own a total of 5.53 million shares, according to a 4th April filing. The hedge fund's stake in the company is worth £30.85 million ($39.51 million) based on yesterday's closing price of £5.58 ($7.14). The biotech firm manufactures gene sequencing technology for scientific research.

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Originally published on IBTimes UK