Hedge Fund FAQ/User Guide

BiopharmIQ
Oct 5, 2023
3 min read

How can hedge fund data help biotech investors?

Hedge fund holdings can help you discover new investment ideas and get more conviction about your current holdings. For example, you can see how many top biotech or biopharma hedge funds hold your favorite companies or which tickers are the most popular tickers amongst top biotech or biopharma hedge funds. When you use hedge fund information, you leverage the expertise and resources of top hedge funds for your investment decisions. At BPIQ.com we provide information regarding holdings of top biopharma hedge funds. See FN2 below for the different hedge fund information available on BPIQ.com.

What data supports the value of top biopharma hedge fund data?

We conclude based on our monitoring and back-testing, that hedge fund data from top biopharma hedge funds can be very valuable in helping to make investment decisions. We find this especially true when we look across pools of top biopharma-focused funds and identify companies with the highest combined percent holdings, top holdings by tickers in the top 10, 20, 40, or 50 holdings across funds, and/or consensus holdings. For more details, see FN1 below.

What are the characteristics shared by all the top biopharma hedge funds we identified?

We identified 35 hedge funds that were SEC 13F filers identified as hedge funds that had at least $250M in assets under management, wherein at least 14 of their top 20 holdings were biopharma companies.

What are the limitations of hedge fund data/information?

Hedge funds that meet a minimum size threshold, are required to submit their holdings to the SEC and the SEC makes this information publicly available. However, funds don’t have to provide their non-invested cash and thus as far as we understand it, return percentages for funds can only be estimated based on the value of stock holdings over time, not total fund value/returns. Furthermore, unless they hold more than a 5% stake in a company, holding information only needs to be updated by the funds on a quarterly basis, 45 days after the end of each quarter. Thus, hedge fund information tends to lag. And if a fund holds more than 5% stake, they still only need to report a change in ownership if it changes by 1% or more. Despite these limitations, as shown above, biopharma hedge fund data in our view, is very valuable information for biopharma investors as part of their overall investment diligence.

What Biopharma-focused hedge funds does BPIQ follow?

At BPIQ we track quarterly 13F filings for some of the largest, best known biotech hedge funds. We analyze 36 funds (as of 9/21/23), including the following:

Baker Bros
EcoR1
RA Capital
Baker Brothers
Perceptive Advisors
Orbimed Partners
Opaleye
NEA Management
Logos
Casdin
Vivo
Cormorant
Redmile Group
And more!

Become a BPIQ Elite member today to access this new information!

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Footnotes

FN1 We back-tested various strategies for combined hedge fund holdings for the top 36 biopharma hedge funds that we identified. Results of 6 of those strategies are shown in the table below, as well as data from similar periods of time for XBI, a top biotech extended trading fund. Note that each of the 6 strategies presented beat XBI in every duration tested. We found that these 6 strategies were among over 20 strategies that we identified that consistently beat XBI when we performed back testing, even if such back testing was performed starting 1, 3, or 5 years ago. The overall conclusion of our backtesting is that by analyzing combined holdings across many funds, these combined holdings beat XBI the vast majority of the time frames analyzed. Not only did this identify strategies that we use as part of at least some of our portfolios on BPIQ.com, but also they help establish that consensus holdings from these top 36 biopharma hedge funds provide valuable information for biopharma investors in their investment decisions.

Table 1. Back-testing results using consensus data across 36 top biopharma hedge funds