Armistice Capital, a $2bn equity long-short hedge fund with a focus on biotech, has recorded its third straight month of losses in 2025 – just after locking in investor capital for the full year, according to a report by the Wall Street Journal.
The report cites unnamed sources familiar with the firm’s returns, as revealing that the fund, led by founder and CIO Steven Boyd, suffered a 19% decline in March, marking the worst monthly performance since its 2012 launch, to finish Q1 down 18%, before seeing an additional 0.5% loss in April.
Under revised terms that took effect on 1 January, redemptions are now suspended for all of 2025. That lock-up – implemented before the downturn – is now being tested amid increasing LP frustration.
On a recent investor call, Boyd described the performance as an outlier, blaming a combination of technical pressure from multi-manager hedge funds and broader political shocks to the biotech sector.
“We weren’t hit by a single failed trial or fraud,” Boyd said. “We were caught in collateral damage.” He attributed March’s rout in part to forced de-risking by multi-manager platforms, which exited overlapping positions and flooded the market with sell orders.
Further complicating sentiment was Robert F Kennedy Jr’s plan to overhaul the FDA and slash government healthcare jobs – a move Boyd says triggered a “buyers’ strike” in biotech names.
Investor frustrations began building in late 2024, when redemptions surged ahead of the new terms. Armistice received exit requests totalling $420m – roughly 20% of AUM – during Q4, according to recent investor communications. Of that, $285m was paid via side pockets, a mechanism often used to ring-fence illiquid assets.
The firm’s large allocation to volatile biotech warrants made it difficult to liquidate portions of the portfolio under pressure, contributing to the partial redemption structure.
Despite 2025’s rocky start, Armistice ended 2024 with $28m in investment profits and boasts a 24% annualised return since inception. The fund recovered from a similar setback in 2018, delivering a 32% gain the following year.
