We believe our focus on the healthcare sector gives us greater strength compared to more broadly focused portfolio managers. Our experienced healthcare specialists provide us with significantly better opportunities to identify companies with particularly high potential. The Scientific Advisory Board enables our Investment Team to better understand the relationship between the developments and the trends throughout the medical world.
This highly successful approach was first established by Henrik Rhenman during the late 90’s when he started a global healthcare fund for his employer. During his ten-year tenure as Chief Investment Officer between 1998 and 2008, the fund increased in value by 799% (in USD). It thus became the world’s best pharmaceutical fund (according to Bloomberg’s database). During the same period a global index rose by only 40%.
WE WORK WITH A LONG-TERM VIEW AND ACTIVE MANAGEMENT
Rhenman Healthcare Equity L/S is a hedge fund that takes long and short positions in both listed shares and other financial instruments. Our investment horizon is long, but we trade actively. We strive for broad geographic exposure, and since the US is a dominant player within healthcare, our geographic equity allocation is usually two thirds in the US and one third in the rest of the world.
Typically, the fund has about a quarter in each of the sub-sectors (pharmaceuticals, biotechnology, medical technology and service), with a typical roughly even split between small, medium and large companies. The market capitalization of the portfolio companies typically exceeds $200m, with few exceptions.
Currently we have relatively few investments in Asian companies despite the large and growing market. We prefer listed companies in the west with strong sales in the emerging countries, but this ratio will, in all probability, change over time.
Please note that we do not give investment recommendations, and investors that consider investing in the fund are recommended to discuss this matter with professional investment advisors.
THE FUND OFFERS DIVERSIFICATION
To limit the risks, we constantly aim for high liquidity in the portfolio companies. Normally, the fund has 60-80 core holdings, which implies a good diversification. An investment in one particular company is usually not greater than 8% of the fund. We strive to invest a maximum of 20% of the capital in companies that are in the development stage and not yet cash flow positive. Another risk limitation target is that no single company specific event shall affect the fund’s NAV by more than -1% (on a fund level).
Our investment strategy includes utilising the freer investment rules for hedge funds, both to create value growth and to limit risks. The portfolio managers work actively with derivatives and futures, both to protect the capital and to create performance.