2021 is probably the most challenging year for investing in biotech stocks since I have joined the industry (early 2010s).
I would think many of you probably have not had an easy year with biotech investing – if you made good money trading / investing in biotech stocks.
There are many factors that made biotech investing challenging – particularly for institutional investors (i.e. hedge funds), which are.
- Massive institutional capital flow into select biotech stocks from generalist community
- Massive retail capital flow that is highly unpredictable for institutions to understand
What has generally been “understood” to be “price-in” created a lot of stock price reactions to catalysts that smoked hedge fund positions. The weakest chain goes out first, and then you see a chain reaction as this covid19-driven conditions in financial market continues for over a year.
Recently, I was looking hedge fund statistics that is available on Bloomberg terminal, and this really surprised me.
There are two hedge funds that caught my attention:
TWO LEGENDARY BIOTECH-FOCUSED HEDGE FUNDS ARE DOWN -10% TO -20% YTD
AND THEY ARE PERCEPTIVE ADVISORS AND AVORO LIFE SCIENCES (FORMERLY KNOWN AS venBIO)
They are extremely well-known hedge funds in institutional community – great investors with great reputation.
About Avoro
IN 2021, STOCK PRICE PERFORMANCE HAS DRIVEN MORE BY POSITIONING OF DIFFERENT FUNDS OR FUNDS TRYING TO GUESS WHAT THE OTHERS WILL DO VS. FUNDAMENTALS.
This year, my goal is to survive for 2022.
Biotech has been difficult, but after a drawdown, there is bound to be a rebound rally.
I am engaged in long-short equity, so I am a bit covered, but net-long funds were definitely not the best neighborhood in 2021 – obviously, they will be very well-positioned for rally.
Fundamentals will prevail in the end – this is not my first rodeo. I discussed before in below – with time and patience, fundamentals will take care of it.
