Easy come, easy go.
One of the top-performing hedge funds in 2015 — maybe the best in a tough year — has already given back a big chunk of those profits.
The Perceptive Life Sciences fund, managed by New York–based Perceptive Advisors, posted a 51.8 percent gain last year but is already down nearly 17 percent in just the first two months of the year, making it among the biggest hedge fund losers in 2016.
The little-known fund, headed by Joseph Edelman, specializes in biotechnology, pharmaceutical, medical device, diagnostics and health services companies. And this sector has taken a beating in the early part of the year.
Perceptive, however, has not been hurt by the usual cast of characters that have cratered portfolios these past few months. Chances are most investors have heard of only two of its top ten holdings: Allergan (No. 7) and Teva Pharmaceutical Industries (No. 10).
The well-diversified fund offered by Perceptive Advisors — which has a total of $2 billion under management, including private investments — is dominated by a number of small- and midcap, little-known therapeutic companies, which have also suffered heavily in the early-year health care and pharmaceutical sell-off. This is especially true for the fund’s two largest long positions, Amicus Therapeutics and Neurocrine Biosciences, which combined to account for about 21 percent of Perceptive’s $1.3 billion public equity portfolio at year-end.
Amicus, which specializes in products for rare and orphan diseases, plunged more than 36 percent in the first two months of the year. The stock, which has a $921 million market capitalization, climbed more than 16 percent last year.
Neurocrine, which specializes in developing drugs for the treatment of neurological and endocrine-related diseases and disorders, is larger, with a $2.9 billion market cap. Its stock also was down about 36 percent over the first two months of the year. Last year, however, it surged nearly 150 percent in part because it received good news on a couple of drugs in development.
Sarepta Therapeutics, Perceptive’s third-largest position, fell by 64 percent in the first two months. The stock more than halved in value in one day in mid-January after the company got bad news from the Food and Drug Administration about a drug for which it was seeking accelerated approval.
Tesaro, Perceptive’s fifth-largest long holding going into 2016, fell 23 percent over the past two months. (Dyax Corp., the hedge fund’s fourth-largest position, was acquired by Shire in January.)
Although Edelman received a BA in psychology from the University of California, San Diego, he has spent his entire Wall Street career specializing in health care stocks. 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.
Perceptive has compounded at 16.75 percent since its 2002 inception. In fact, 2015 was not even its best year. It posted a nearly 55 percent gain in 2013, and very strong double-digit gains in 2012 and again in 2014.
