Baker Brothers Hedge Fund Gets $1.4 Billion on Takeover

Baker Brothers Advisors, the New York hedge fund run by Julian and Felix Baker, had its second billion-dollar gain on a biotechnology stock this year with the takeover of Synageva BioPharma Corp.

Baker Brothers, is largest shareholder of Synageva, which on Wednesday agreed to be acquired by Alexion Pharmaceuticals Inc. for $8.4 billion in cash and stock. The shares more than doubled after the news was announced, translating into a one-day paper gain of as much as $1.4 billion for Baker Brothers based on the 11.7 million shares the firm owned as of Jan. 7, according to data compiled by Bloomberg.

Baker Brothers managed $9.8 billion in U.S. equities as of Dec. 31, most of which was invested in health care stocks, according to a regulatory filing. The hedge fund has benefited from an increase in acquisitions in the industry, as well as rising share prices. Biotechnology mergers and acquisitions in 2015 are running at five times the pace of 2014, with $24.2 billion in deals, according to data compiled by Bloomberg. Health care is the best performing sector in the Standard & Poor’s 500 Index this year.

The hedge fund’s largest position, Pharmacyclics Inc., which in March agreed to be purchased by AbbVie Inc. for $21 billion, has more than doubled in price this year. Baker Brothers owned 9.1 million Pharmacyclics shares as of Dec. 31, translating into a gain of $1.2 billion on that stock, according to data compiled by Bloomberg.

The hedge fund’s second-largest position, Incyte Corp., has appreciated 36 percent in 2015, according to data compiled by Bloomberg. A call to Baker Brothers was not immediately returned.

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