While the Fed proceeds with its large investigation into insider trading, The Wall Street Journal looked into 3 health-care mergers in which several hedge funds under scrutiny appeared to make well-timed bets, according to public filings. 

The deals:  (i) MedImmune Inc.’s takeover by AstraZeneca PLC in 2007;  (ii) Schering-Plough Corp.’s takeover by Merck & Co. in 2009;  and, (iii) Wyeth Pharmaceuticals Inc.'s takeover by Pfizer Inc. in 2009.  

The hedge funds:  (i) SAC Capital Advisors LP;  (ii ) Diamondback Capital Mgmt LP;  (iii) Jana Partners LLC;  and. (iv) Balyasny Asset Mgmt LP. 

Stocks in the acquired companies spiked after they were announced.  And all 4 hedge funds increased their holdings in one or more of 3 health-care stocks during the quarters in which the companies announced mergers and the stock shot up in price, according to public filings.  The Journal notes that these deals were examined by U.S. civil and/or criminal investigators in connection with insider trading.  Several firms that appeared to bulk up on stocks of the acquired companies around deal time have also been subpoenaed or raided by the government.

    Caveats to Journal's Analysis.   Specific dates these funds bought and sold the health-care stocks aren’t known, so it couldn’t be determined whether they bought before or after the deals were announced.  The funds wouldn’t say.  Some funds could have bought some shares to “arbitrage,” or bet on the difference between the stock’s price at the announcement and the expected final price of the deal. 

The WSJ has previously reported that regulators are looking at whether bankers with Goldman Sachs, which advised Schering-Plough and MedImmune, as well as other bankers, may have leaked information about the acquisitions.  Goldman Sachs declined to comment. 

For further details on this story, click onto:   [WSJournal, 12/3, "A Look at Hedge Fund Betting on Health-Care Deals"]

For a look at what WSJ's Deal Journal had to say, back in 2009, when trading and rumors swirled around the Schering-Plough acquisition, click onto:   [WSJ Deal Journal, 3/9/09, "Merck-Schering Insider Trading? SEC Should Take a Look']