GEVA helped advance Sectoral Asset 9.4% in May. ALXN did not
GEVA helped Sectoral Asset Management return an estimated 9.4% for May 2015 - the fully hedged version, 4.06%
Sectoral Asset Management generated a 9.36% return on their publicly disclosed long portfolio for the month ending May 2015, outperforming the S&P500 by 935 basis points (bp). On a hedged basis, the portfolio would have returned 4.06% StockAlpha over the same period. Sectoral's StockAlpha reflects the return of the net return if each security in their portfolio was hedged with a sector ETF, such that the resulting portfolio was market, beta and sector neutral. StockAlpha in the Health sector contributed the most to StockAlpha during the month.
Positive Contributors to Sectoral's Returns
Sectoral’s position in Synageva BioPharma Corp (GEVA) contributed the most to the performance of the manager’s long-portfolio during the month. Over the month of May 2015, Sectoral's 1.4% position in Synageva BioPharma Corp (GEVA) increased in value by 124.5%, contributing 1.69% (1.4%*124.5%=1.69%)to the long portfolios overall return. Looking at Sectoral's portfolio through a fully hedged StockAlpha lens, the holding of Synageva BioPharma Corp (GEVA) also provided the largest contribution to fully hedged returns. Synageva BioPharma Corp (GEVA) returned 124.5% during the month compared to the Health sector, which returned 4.5%. As a result, after taking into account Synageva BioPharma Corp (GEVA)'s beta relative to its sector, the position contributed 1.6% of StockAlpha to the Sectoral’s monthly performance.
Negative Contributors to Sectoral's Returns
Much of the drag on Sectoral’s long-portfolio during the month can be attributed to the holding of Alexion Pharmaceuticals Inc. (ALXN). Over the month of May 2015, the manager's 2.6% position in Alexion Pharmaceuticals Inc. (ALXN) returned -3.1%, contributing -0.08% (2.6%*-3.1%=-0.08%)to the long portfolios overall return. Looking at Sectoral's portfolio through a fully hedged StockAlpha lens, the holding of Alexion Pharmaceuticals Inc. (ALXN) also provided the most negative contribution to fully hedged returns. Alexion Pharmaceuticals Inc. (ALXN) returned -3.1% during the month compared to the Health sector, which returned 4.5%. As a result, the position contributed -0.3% of StockAlpha to the manager’s monthly performance.
Overlap with other hedge funds
Sectoral’s top 10 largest positions, INCYTE Corporation (INCY) is the name that is owned by most other hedge funds. 8.1% of hedge funds within Symmetric's universe had a position in INCYTE Corporation (INCY) as of March 31, 2015, making it a contrarian name relative to other stocks, even though it is the most consensus within the manager's top positions. Sectoral initiated its position in INCYTE Corporation (INCY) 4.25 years ago. Other hedge funds that have significant ownership stakes in INCYTE Corporation (INCY) include Ratan Capital Management Lp (16.4% position initiated 1 year ago), Sachem Head Capital Management (15.8% position initiated 0.5 years ago) and Oskie Capital Management Llc (11.5% position initiated 1 year ago). Overall, Sectoral's book is neither consensus or contrarian, with the average position held in the portfolio held by 11.4% of hedge funds. So far, Sectoral’s estimated returns for June are down twelve basis points, but the past week has shown particular strength. They're up an estimated 105 bps over the past five days, which has largely been driven by a rebound in Alexion Pharmaceuticals, Inc. (ALXN) and strength in Gilead Sciences, Inc. (GILD). Use Symmetric.io to surface managers with unique sources of alpha and flag those that may be in trouble.