Seth Klarman’s Baupost Group filed a 13D on Friday afternoon revealing a 27.55% stake in Idenix Pharmaceuticals Inc (NASDAQ:IDIX). The value oriented hedge fund now owns 36,910,868 shares of the company compared to $19.98 stake according to the firm’s 13F for the second quarter.

The hedge fund is now the largest shareholder of the company, followed by Novartis with a 25% stake. According to the 13D nearly half the shares were acquired on Friday at a cost basis of of $3.98. Shares of the company soared over 40% on Friday, closing at $4.61.

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Baupost Group’s timely bet

Baupost Group has bemoaned the lack of opportunity in equities and has been finding more investments in debt. However, at least in this case, Baupost made a timely good equity investment. Shares of IDIX have been on a rollercoaster ride, reaching as high as $5.70 a share before falling as low as $3.29 on October 31st. Baupost appears to have made a timely buy as pessimism grew over the company’s hepatitis drug. These concerns were somewhat alleviated when the company announced clinical testing in Canada and Belgium on the Friday conference call.

Idenix’s “Nuke”(Nucleotide analogue inhibitors) called 437, designed to block a different enzyme the virus needs to copy itself could enter Phase 2b in the US sometime in 2015 according to Alethia Young and Robyn Karnauskas, Research analysts at Deutsche bank. However, Ying Huang, Ph.D. of Barclays remains more skeptical stating “it is uncertain at this point whether IDX21437 has a viable development path in the U.S.”

On the conference call, CEO had the following to say about the drug