May 16, 2019

Hedge funds and short sellers dig into health care stocks

Dion Rabouin, author of Markets

Hedge funds and short sellers are raising their bets that lawsuits against pharmaceutical companies will drive down their stock prices and maybe even put them out of business.

The intrigue: Data from S3 Partners provided exclusively to Axios shows bets against biotech and pharmaceutical companies have risen 12% since the beginning of the year to nearly $62 billion of short interest.

  • "Wall Street is underestimating the impact on companies from the opioid litigation," Justin Simon of health-care hedge fund Jasper Capital Management told the Wall Street Journal.

Driving the news: Close to 2,000 lawsuits have been filed accusing big pharma companies of fueling the opioid epidemic. Drugmakers including Mallinckrodt, Allergan, Endo Pharmaceutical, Johnson & Johnson and Teva, and several drug distributors have been named as defendants.

Why you'll hear about this again: Jasper has been betting against Mallinckrodt and other companies named in the lawsuits, WSJ reports, noting that "Some hedge funds have been watching for distress in the sector, citing certain companies' use of leverage or declining profitability."

  • "On Teva's most recent earnings call, Chief Executive Kåre Schultz said, 'As you know, we have a lot of debt, so we don’t have that much money. So I think [opioid plaintiffs will] have to find somebody else if they want big settlements. It won't be with us.'"

Go deeper: Lawsuit says Johnson & Johnson was opioid "kingpin"

Go deeper

Facebook employees stage "virtual walkout"

Illustration: Sarah Grillo/Axios

"Dozens" of Facebook employees staged a "virtual walkout" Monday over the company's decision not to take action against President Trump's provocative messages in the face of nationwide protests against police violence, the New York Times reports.

Why it matters: While Twitter added fact-check labels and hid the president's most inflammatory tweet — "when the looting starts, the shooting starts" — Facebook has said Trump's statements do not violate its policies, and that the platform aims to promote free speech.

Updated 21 mins ago - Politics & Policy

Trump lashes out at governors, urges them to "dominate" protesters

President Trump berated the nation’s governors in a video teleconference call Monday, calling many of them "weak" and demanding tougher crackdowns on the protests that erupted throughout the country following the killing of George Floyd, according to multiple reports.

The big picture: Trump blamed violence on the "the radical left" and told the governors, who were joined by law enforcement and national security officials, that they have to "dominate" protesters and "arrest people" in order to bring an end to the unrest.

Updated 21 mins ago - Politics & Policy

Coronavirus dashboard

Photo Illustration: Sarah Grillo/Axios. Photos: Noam Galai, Jamie McCarthy, Josep Lago/AFP, Alfredo Estrella/AFP, and Narayan Maharjan/NurPhoto, all via Getty Images

  1. Global: Total confirmed cases as of 12:30 p.m. ET: 6,206,773 — Total deaths: 372,752 — Total recoveries — 2,661,643Map.
  2. U.S.: Total confirmed cases as of 12:30 p.m. ET: 1,793,780 — Total deaths: 104,3450 — Total recoveries: 444,758 — Total tested: 16,936,891Map.
  3. Public health: Fauci says“My meetings with the president have been dramatically decreased” — Coronavirus looms over George Floyd protests across the country.
  4. Climate: Your guide to comparing climate change and coronavirus.
  5. Economy: A busy week for IPOs despite upheaval from protests and pandemic.
  6. World: Former FDA commissioner says "this is not the time" to cut ties with WHO.