Rhenman & Partners Asset Management, a Stockholm-based hedge fund firm which invests in global healthcare stocks, is optimistic about a post-US election market bounce, and points to “intense activity” among vaccine developers working on a treatment for Covid-19.
The firm’s Rhenman Healthcare Equity Long/Short Fund – which trades a range of small, medium and large pharmaceuticals, biotechnology, medical technology and service company stocks – was down in July.
But Henrik Rhenman, founding partner and chief investment officer, believes the traditional uncertainty that typically looms over the healthcare sector ahead of every US presidential election will give way to a strong uptick in November and December.
Rhenman Healthcare Equity Long/Short slipped 3.7 per cent in July in its euro-denominated class, and is down roughly 0.5 per cent for the year so far, while its dollar share class was up 1.1 per cent last month.
“The dollar effect was almost 5 per cent. That doesn’t happen every month,” Rhenman said, after the US dollar posted its weakest performance in July in ten years.
Speaking on a Rhenman client webcast this week, Rhenman and Susanna Urdmark, portfolio manager of the Rhenman Healthcare Equity Long/Short strategy, said one of the best performing stocks in the strategy in July was Livongo Health, a California-based consumer digital health company, and a relatively new position in the portfolio.
“Livongo offers patients with chronic disease the ability to monitor the disease remotely and, through algorithms, get advice and help to control their disease more effectively,” Urdmark said, noting how its product offering has enjoyed strong take-up among employers during social distancing and lockdown measures.
On the flip-side, the worst performing stock in the portfolio was Esperion, which earlier this year launched a cholesterol-lowering drug.
Despite it being a “fantastic” drug, there are suggestions its roll-out to patients may be postponed until the pandemic has subsided, Rhenman said, resulting in concerns that sales will be lower this year.
Elsewhere, Urdmark also pointed to “intense activity” among vaccine developers who are aiming to find an effective vaccine for Covid-19.
“In the best-case scenario, we may have a number of vaccines approved by year-end,” she said, though also urged caution over the effectiveness of any potential treatment, particularly among the older population, manufacturing capacity, as well as how long any vaccine may last.
Looking ahead, Rhenman highlighted the approaching US presidential election, which traditionally flags up concerns in the market over who will win the poll, the composition of Congress, and its subsequent impact on health insurance coverage and drug companies.
“People are a little bit cautious but usually the market comes back in a strong way in November and December and that’s what’s going to happen this year as well,” he said.
Rhenman & Partners, which manages around EUR700 million in assets, started a series of online webcasts for clients earlier this year amid the shift towards remote working and social distancing following the coronavirus pandemic.