MannKind Corporation (NASDAQ: MNKD) has been having an interesting time in the market as of late. The beleaguered biotechnology company has been struggling to build into a profit. Nonetheless, that didn’t deter David Shaw – one of the best known investors – from a recent investment in the company. Today, we’ll talk about that investment, why Shaw might be interested in MNKD, and what we’ll be watching for ahead.
D.E. Shaw Invests In MNKD
David Shaw is one of the world’s most well-known investors. In fact, he founded one of the most trusted hedge funds on the market today – the D.E. Shaw Hedge Fund. He is also pretty interested in MannKind Corporation. At least, that’s what we gather from a recent 13F form filed with the United States Securities and Exchange Commission. In a recent statement, the fund offered the following:
“Our firm has been built in part by attempting to do what other companies might consider impossible, or never imagine at all. A single transformative idea that ultimately works – for a new business, a new trading model, or an improved back office process – is worth a dozen ideas that lead nowhere.”
Well, the firm obviously believes that the volatile biotech company, MNKD, is right in line with that statement. That’s because in a recent 13F filing with the SEC, D.E. Shaw increased its holdings in the company by a massive 3050%, purchasing 1,188,996 additional shares with an investment of $2,665,000.
Why Would D.E. Shaw Want To Invest In MNKD?
At first glance, this may be a tough question to answer. At the end of the day, MannKind has been struggling with Afrezza sales since the launch of the product a couple of years back. However, when we dig into the details, Shaw may actually be onto something here.
The reality is that, for MNKD to succeed, the company needs to see increased sales of its flagship fast-acting inhaled insulin known as Afrezza. While sales definitely aren’t what investors want to see at the moment, the momentum of sales growth is definitely there, with MNKD posting incredible quarter-over-quarter growth. This, combined with the fact that the company continues to seek further insurance coverage and recently saw a label change approved by the United States FDA, suggests that sales are likely to rise, and that it may happen relatively quickly.
At the end of the day, the answer to the above question is simple. David Shaw knows that the largest gains happen if you buy when fear, as well as opportunity, runs high. With a couple of years of poor sales reports, fear is definitely high among MNKD investors. On the other hand, with the recent label change and strong quarter-over-quarter growth in sales, there’s a high probability of this investment turning into a strong profit. So, it seems as though D.E. Shaw hit the nail on the head here.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MNKD. In particular, we’re interested in watching the sales growth surrounding Afrezza. At the end of the day, the recent label change was big news, and sales are already growing. Considering the label change, sales growth is likely to continue at an even faster pace. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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