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Every day when I wake up, I read The Wall Street Journal. See, a large part of my day involves looking for new ideas to invest in. Whether it is reading the WSJ, a recent earnings transcript, or a company's website, I am always on the lookout for my next big idea.
But four times a year, I get to read a set of reports that are chock full of ideas.
At the end of every quarter, the largest institutional investors reveal all the stocks they own. This is done through a 13F filing. These documents show what stocks, hedge funds, and institutional investment managers who control over $100 million in assets are buying.
And what I found this quarter could be the most disruptive software platform to ever hit the pharmaceutical industry…
How I Found This Top Biotech Innovator
While thousands of 13F reports are filed every quarter, I've culled the number I look at over the years to a select 50 funds I believe are run by the best-performing investors in the world. Even though many of these funds are filled with large and mega-cap stocks like Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN), Netflix Inc. (NASDAQ: NFLX), and Apple Inc. (NASDAQ: AAPL), new or growing smaller positions help me to get in early on exciting investments. Many multibillion-dollar hedge funds and mutual funds have the resources I could never afford and often give me new investment ideas that I can share with our readers on Money Morning.
This last quarter was particularly interesting as the pandemic has really reshaped how business is done and created structural changes that could last forever. For me, this meant that I could potentially find interesting new investment ideas from my favorite investors.
With all the attention vaccine stocks are getting, and many of them soaring to new highs, I thought I would take a step back and look at pick and shovel plays. This is an investment strategy that invests in the underlying technology needed to produce a good or service instead of the final output.
This helps me to invest in an industry without having to worry about the risks of the market for the final product. Think about investing in the semiconductors and not the phone, for example. These types of companies can also often lead to much more stable investments.
Knowing that many drugs never actually make it to market even though billions in R&D has been spent developing the drug, I thought to myself, how can I still benefit from all of this spending?
This led me to a very interesting 13F filed this quarter by the Bill and Melinda Gates Foundation. Given the primary goals of the foundation are, globally, to enhance healthcare and reduce extreme poverty, I thought this would be a perfect place to look given the current environment.
It turns out the Bill and Melinda Gates Foundation, which is the world's largest, recently invested $300 million into a U.S.-based drug discovery software company. That was enough to put it in its top 10 investments of its $17 billion fund. On top of the Gates foundation, prolific investor David Shaw also owns a large chunk of the company.
This biotech stock could change the game for drug makers forever.
And you can still get in before the rest of the investing world catches on.
In fact, this biotech IPO was buried in the pandemic news this spring, but that's working to your advantage…
One of the Best Biotech Stocks You Haven't Heard Of
About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.