Avidity Fund Gains 14% in Hot Start for Health-Care Specialists
Avidity Fund Gains 14% in Hot Start for Health-Care Specialists
(Bloomberg) -- Health-care specialist Avidity Partners is tapping into one of the hottest sectors for hedge fund startups, and its early investors are being rewarded.
The Dallas-based firm posted a 14% return in the first quarter, according to people with knowledge of the matter, even as rocky equity markets took a toll on many of its peers. From its Nov. 1 launch through March, the long-short equity fund climbed 26% while the S&P 500 Index slid almost 15% and the SPDR S&P Biotech ETF fell more than 5%.
Avidity, co-founded by David Witzke and Michael Gregory, former money managers at Citadel and Highland Capital Management, respectively, has more than $1 billion in assets after beginning trading with $750 million. The firm, which specializes in therapeutics investments and also bets on and against medical technology, diagnostics and life sciences companies, plans to pause its fundraising efforts in June.
Witzke and Gregory are tapping into client demand for experts who can read the pulse of an often volatile market sector. Health care and technology, media and telecommunications specialists were the areas most in demand among allocators to equity hedge funds, according to a survey last year by Goldman Sachs Group Inc. and Hedge Fund Research Inc.
Global markets have tumbled this year as the coronavirus pandemic has advanced, surpassing 3.1 million confirmed cases and 215,000 deaths worldwide. In March, Avidity rose 4.6%, the people said, while the S&P 500 fell more than 12%.
Avidity’s gains have come from both sides of the portfolio, with 11% attributable to long positions and 15% to shorts since inception, one of the people said.
Witzke, the startup’s chief investment officer, ran one of the largest health-care portfolios at Surveyor Capital, a stock unit at Ken Griffin’s Citadel, and has a doctorate in chemical engineering. Gregory, who oversees Avidity’s research, led health care at Highland and has a master’s in business administration from a joint program among Yale University’s medical, management and public health schools.
Both Witzke and Gregory declined to comment.
Avidity’s success over the last half-year contrasts with other hedge funds, some of which have suffered losses as the coronavirus roils markets. Ray Dalio, Michael Hintze and Christopher Hohn are among prominent managers whose funds fell 20% or more during the first quarter.
“The winners are really winning, and the losers are really losing,” Fabio Savoldelli, an adjunct professor at Columbia Business School, said Tuesday in an interview with Bloomberg Television. “Plenty have gotten crushed.”
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