| Joseph Edelman, Perceptive Advisors (photo credit: Chris Goodney/Bloomberg) |
Over the past five years, hedge fund manager Joseph Edelman has had one of the hottest hands in the industry.
In 2017, he achieved a return above 40 percent for the third time during this period. And unlike many other managers who post gargantuan gains from time to time, Edelman did not suffer losses during the off years.
His biotech- and healthcare-oriented Perceptive Life Sciences Fund was up an estimated 40.13 percent last year, making it one of the best-performing hedge funds in 2017.
The fund previously rose 51.81 percent in 2015 and 47.8 percent in 2013, according to an investor.
It was up 3.81 percent in 2016 and 18.86 percent in 2014.
As a result, Edelman’s firm, Perceptive Advisors, now manages about $2.8 billion, despite the fact that the firm is not currently marketing and its funds have a soft close.
Edelman declined to comment for this story.
Perceptive specializes in biotechnology, pharmaceutical, medical device, diagnostics, and health services companies. Although the portfolio includes dozens of names, the hedge fund firm’s top ten holdings account for more than half of its assets.
The firm’s performance tends to be driven by five or six stocks, usually shares in emerging biotechnology companies that are making little or no money. When a fund has a winner, Perceptive frequently ramps up the risk, especially when it is in the black – occasionally leading to wild performance swings from month to month and quarter to quarter.
The firm also devotes some of its assets to private companies.
At the end of the third quarter, Perceptive held 130 individual positions in U.S. common stocks. In that period alone, it established 45 new positions and liquidated 32.
Last year’s performance was heavily driven by four stocks.
For example, shares of Amicus Therapeutics, Perceptive’s second largest long, nearly tripled. The company specializes in developing advanced therapies to treat rare and orphan diseases. It benefitted in part from migalastat, an oral treatment for Fabry disease, which leads to progressive, irreversible organ damage.
Meanwhile, Neurocrine Biosciences, Pereceptive’s largest position and a stock it has held since 2010, nearly doubled in price last year. The firm develops drugs for the treatment of neurological and endocrine-related diseases and disorders. In April, the Food and Drug Administration approved its first drug, Ingrezza. The company’s stock has swelled more than 20-fold since Perceptive initiated its position.
Perceptive’s third largest long, Alnylam Pharmaceuticals, more than tripled last year. The biotech company last year received very good news regarding its Phase III trials for Patisiran, a drug intended to treat hereditary transthyretin amyloidosis, a rare disease that results in a life expectancy of 2.5 to 15 years.
Also, Perceptive holding Zogenix tripled in price last year, with most of the stock’s rise occurring on September 29 after the biotech company announced positive results from its first Phase 3 study of a drug used to treat a rare form of epilepsy.
Edelman, who has spent his entire Wall Street career specializing in healthcare stocks, launched Perceptive in 1999. He previously served in analyst roles at Aries Fund, a Paramount Capital Asset Management biotechnology hedge fund, and at investment banks Prudential Securities and Labe, Simpson & Co.
