Primecap Odyssey Outperforms on 40-Fold Gain in PharmacyclicsCharles Stein
The $6.8 billion Primecap Odyssey Aggressive Growth Fund beat 99 percent of rivals in performance over the past five years. A single stock, Pharmacyclics Inc., played a big role in that success.
Pharmacyclics, which agreed to be acquired today for $21 billion, has risen more than 40-fold in the past five years, a period in which it was consistently one of the fund’s top positions. The stock contributed about 15 percent of the fund’s total gain over that period, according to data compiled by Bloomberg.
“Pharamcyclics is just one of many successful biotech investments this team has made,” Daniel Wiener, chief executive officer of Newton, Massachusetts-based Adviser Investments, said in a telephone interview. Wiener, who oversees $3.3 billion, has more than $550 million invested in funds run by Pasadena, California-based Primecap Management.
Primecap, which also manages money for Vanguard, has favored healthcare investments in recent years, according to regulatory filings. “We believe that favorable global demographic trends and ongoing innovation will create opportunities for health care companies to grow revenues faster than the overall economy for the foreseeable future,” the firm wrote in a November letter to shareholders.
AbbVie Inc. beat out Johnson & Johnson with a last-minute bid that clinched the $21 billion purchase of Pharmacyclics, gaining control of a blockbuster blood cancer therapy. Pharmacyclics gained 10.5 percent to $254.65 at 12:09 a.m. in New York.
AbbVie, based in North Chicago, Illinois, will pay $261.25 a share in a mix of cash and stock for Sunnyvale, California-based Pharmacyclics. Five years ago, Pharamacyclics sold for $5.89 a share. In 2009, it fell as low as 57 cents.
Primecap Odyssey Aggressive Growth had 28 percent of its money in health care stocks as of Oct. 31. Pharmacyclics represented 2.6 percent of the fund as of Dec. 31, according to Bloomberg data, down from as much as 6.1 percent in 2012. The fund gained an annual 21.3 percent in the past five years.
The stock-picking team at Primecap won Morningstar Inc.’s top honor among domestic stock managers in 2014. The team’s biggest fund, the $48 billion Vanguard Primecap Fund, beat 99 percent of peers over the past three years, according to data compiled by Bloomberg.
A call to Primecap wasn’t immediately returned.