CSL Shares Rise 15% in 5 Weeks as Two Hedge Funds Make Opposing Bets

2 min read | December 05, 2023 12:59 AM AEDT | By Team Kalkine Media

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CSL Shares Rise 15% in 5 Weeks as Two Hedge Funds Make Opposing Bets — Image source: shutterstock

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The CSL Limited (ASX: CSL) share price is presently trading at $264.35, indicating a marginal 0.07% increase in midday trading on Tuesday. This follows a period of volatility for CSL shares in 2023, characterized by reaching a four-year low of $228.65 per share on October 30.

Despite a recent rebound of 15% over the past five weeks, CSL shares still show a year-to-date decrease of 6.2%. This stands in contrast to the 1.7% increase observed in the S&P/ASX 200 Index (ASX:XJO) for 2023. As part of the ASX healthcare stocks, CSL's performance remains a focal point for investors, influenced by both company-specific factors and broader trends within the healthcare sector.

Hedge funds are making opposing bets on CSL shares, adding to the complexity of the stock's performance. Perpetual Ltd's long/short fund, managed by Anthony Aboud, recently exited a short position on CSL shares. However, Perpetual's concentrated equity fund and long-short Share Plus fund, both managed by Aboud, remain underweight on CSL.

On the other hand, Pendal's Australian long/short fund, led by Jim Taylor, maintains an overweight position on CSL shares, allocating 7.3% of the fund to the ASX 200 healthcare share. Pendal's long-only Horizon Sustainable Australian Share Fund also holds a 9.3% stake in CSL shares.

Perpetual expresses concerns about an earnings downgrade for CSL and potential competition for its drugs, citing Argenx SE's Vyvgart Hytrulo as a competitor. The drug targets chronic inflammatory demyelinating polyneuropathy (CIDP), a rare autoimmune disease. Perpetual believes that Vyvgart Hytrulo could impact demand for CSL's IVIG drug.

Meanwhile, Pendal dismisses Vyvgart Hytrulo as a major challenger to CSL, noting its failure to treat a rare bleeding disorder in a trial. Pendal sees this as diffusing some of the competitive concerns facing CSL.

Market analysts attribute CSL's subdued share price performance in 2023 to factors such as slower recovery to pre-pandemic plasma GM, potential FcRn disruption in CIDP, and impending generic competition for V4's Injectafer in Europe. Additionally, news that Ozempic, a drug treating diabetes and obesity, may be effective for chronic kidney disease (CKD), poses concerns given CSL's acquisition of CKD business Vifor two years ago.

The divergent views from hedge funds and the complex landscape surrounding CSL's competitive position contribute to the uncertainty surrounding the stock.

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