Shares of biotechnology firm MannKind Corp., which specializes in therapeutic products for diabetes and has been in free fall lately, plummeted another 8 percent or so on Friday, to close at a new low of about $0.50 per share.
This is bad news for MannKind stockholders but is particularly good news for the folks at New York–based Tourbillon Capital Partners, which has been heavily short the biotechnology stock for a few years.
MannKind plunged 87 percent in the third quarter alone, helping Tourbillon’s flagship long-short fund, Tourbillon Global Equities, post a better than 9 percent gain for the three-month period, which trimmed its earlier-year loss significantly. Heading into the final quarter, the fund was down 7 percent for the year, according to an investor.
Shares of MannKind have fallen 95 percent since Tourbillon began shorting them. According to an investor, the fund is still short the stock.
MannKind’s contribution is especially appreciated at Tourbillon, given the difficulty long-short funds in general have been experiencing with their short portfolios. As evidence, the firm’s long-only fund, Tourbillon Global Long Alpha Fund, is up 9.7 percent for the year through the end of September. The firm declined to comment for this story.
Tourbillon was founded by Jason Karp in 2013. He previously was a partner and co–chief investment officer at Carlson Capital, working closely with founder Clint Carlson before leaving in 2012 to start Tourbillon. Before that, he had served as a portfolio manager of global equities and the director of research at CR Intrinsic Investors, which was part of Steven Cohen’s now-defunct SAC Capital Advisors.
Last year Tourbillon Global Equities gained 12 percent. It returned 10.05 percent in 2014 and 20.69 percent in 2013, when Karp launched his firm.
Besides MannKind, Karp got a boost in the third quarter from a couple of new positions. Shares of Medivation surged 35 percent in the period after Tourbillon initiated its stake. Medivation was the hedge fund’s third-largest individual U.S. long position at the end of the June period. In August, Pfizer announced it will acquire the biotechnology company for about $14 billion.
Meanwhile, last week struggling organic foods company SunOpta announced that Oaktree Capital Management agreed to invest $85 million in the form of exchangeable preferred shares. SunOpta plans to use the proceeds to reduce debt. Tourbillon has a 25 percent economic interest in the stock and a 9.9 percent voting interest.
“We believe this partnership — in addition to the Board appointments of proven, experienced leaders — greatly improves the probability and timing of long term shareholder value creation, compared to the status quo and other potential strategic options,” Tourbillon said in a statement. “In addition to this strategic investment, the commitment to further review governance and leadership substantiates our view that SunOpta was and is vastly undervalued.”
The stock surged nearly 70 percent in the third quarter. However, it is down nearly 8 percent this month.
Shares of online travel agency Expedia, Tourbillon’s largest individual U.S. stock position at the end of the second quarter, rose about 9.5 percent in the September three-month period. On the other hand, shares of telecom giant AT&T, the second-largest long, lost 6 percent last quarter.
