Healthcare-focused equity hedge fund Rhenman & Partners scored a near-12 per cent return in the first six months of the year, as a number of correct calls in biotechnology and pharmaceuticals stocks drove gains in June.
Healthcare-focused equity hedge fund Rhenman & Partners scored a near-12 per cent return in the first six months of the year, as a number of correct calls in biotechnology and pharmaceuticals stocks drove gains in June.
The Stockholm-based manager’s flagship strategy rose 5 per cent last month overall. Its main euro-denominated IC1 share class was up 5.04 per cent in June, surging to 11.58 per cent year-to-date, while the SEK-denominated RC1 advanced 5.14 per cent last month, bringing its first half performance to 12.07 per cent.
By comparison, Hedge Fund Research’s healthcare-focused equity hedge fund index was up 0.61 per cent in June, and 2.57 per cent for the year, with the broader industry-wide HFR Fund Weighted Composite Index up 12.72 per cent YTD.
The Rhenman Healthcare Equity Long/Short Fund – which invests in small, medium and large pharmaceuticals, biotechnology, medical technology and services stocks – took profits across subsectors, with pharma and biotech proving the biggest contributors.
Rhenman said the strategy’s surge towards the end of H1 compensated for slower performance earlier in the year.
The strongest monthly returns came from Swiss pharmaceuticals and diagnostics company Roche, and Eli Lilly, a US drugmaker. Their share prices rose after the Food and Drug Administration accelerated approval for Biogen’s Aduhelm, an Alzheimer’s treatment, a key area of research for both Roche and Eli Lilly.
On the flipside, the worst contributors in June were MacroGenics, a biopharmaceutical name which develops antibody-based cancer treatments, and US multinational health insurer Cigna. MacroGenics’ share price dropped after questions were raised over the side effects from one of its treatments. Cigna’s value was squeezed by uncertainties stemming from the financial impact of the Aduhelm approval on health insurance firms.
Looking ahead, Rhenman is forecasting a “bright future” for large pharmaceutical names, adding that sectoral rotation between growth and value stocks has remained “conservative” as positive profit revisions approach a peak during the second half of the year.
It added that the fund’s lower exposure to biotech stocks during H1 proved a “wise decision” in light of their relatively poor performance.
“Many of our companies are benefitting as the economy returns to normal. From a historical perspective, pharmaceutical companies have low P/E ratios, and we are able to identify good investment opportunities in all our subsectors,” Rhenman observed.
“We must remain disciplined and invest in companies that are able to cope with a more conservative investment climate in 2022.”
