If you were paying attention to how investment firms were producing over the span of 2016 then you likely came away with knowledge of Highland Small Cap Equity Fund. This fund is a subsidiary of Highland Capital Management and they performed so admirably in 2016 that all eyes are on them here in 2017. This small cap fund focused on energy stocks throughout 2016 in order to bring a 32% return to all of their investors. This year? CEO James Dondero as well as Chief Investment Officer Michael Gregory are shifting their focus to healthcare and real estate.
Last year we saw that the healthcare industry massively under performed, landing at a -2% growth mark. This under performance will likely change in a big way, as Michael Gregory is about to explain. The reason that Gregory is so optimistic about the healthcare industry this year is that the markets are finally responding to a growing opioid epidemic that is raging all across the United States. The strength of oxycodone and similar drugs, as well as their over prescription, is leading to massive changes within and without the industry. Gregory says, “We might see a tremendous rebound.” The reason being, according to Gregory is, “The insurance companies are starting to do something about it.” This of course means that better, newer, and less addictive drugs can be anticipated to hit the market.
Gregory and James Dondero point to two companies that they see as making a difference in 2017. The first company that James Dondero and Highland Capital Management are focusing on is Collegium Pharmaceutical INC. Collegium is developing a new, less addictive, alternative to oxycodone. The drug goes by the name Xtampza ER and there is growing belief that it will solve addiction issues. The second company that Gregory points to is the Pacira Pharmaceuticals, also known as PCRX. Pacira Pharmaceuticals develops Exparel which is a pain reliever commonly used for soft tissue surgeries and oral operations. Gregory says that Exparal will be a catalyst to growth within the industry once it is approved for usage on knee replacement surgery.