Visium Asset Management is founded by Jacob Gottlieb in 2005. It began as a spin off from Balyasny Asset Management and focused predominantly on equities in the healthcare industry. Gottlieb has a PhD from NYU as well as a BA in Economics from Brown University, so he is uniquely qualified to manage the health-focused Visium Asset Management.
Dr. Gottlieb and his team of over 20 experienced investors have been able to produce consistently high returns since Visium Asset Management’s establishment, boasting an average annualized return of 13%. We even named Visium Asset Management one of the 25 best hedge funds of the second quarter 2011 (see the complete list here). However, since the end of the second quarter, Visium Asset Management’s top long stock picks has lost 11.7% versus the S&P 500’s 10.7% loss during the same period.
Visium Asset Management’s low average return since the end of last quarter is owed to several of the fund’s larger holdings producing very low returns. For instance, Ardea Biosciences Inc (RDEA), Visium’s 25th largest position, had a negative 41% return. Luckily, Gottlieb reduced his position in the company by 50% last quarter, so the negative effects were minimized to a degree. Other hedge fund managers won’t so lucky, like Julian and Felix Baker of Baker Brothers Advisors (check out their top stock picks). Visium Asset Management also had major losses through its positions in Brookdale Senior Living (BKD), losing 40%, and in Intermune (ITMN), losing -33%.
The hedge fund's greatest gains, and his only gain over 5%, came through Pharmasset Inc (VRUS); the hedge fund gained 16%. Pharmasset is also a favorite of Baker Brothers Advisors, who increased their position by 15% last quarter, and Adage Capital Management, who increased their position by 42% last quarter.
We like Jacob Gottlieb. His experience is invaluable in a healthcare-focused hedge fund like Visium. Usually sector oriented hedge funds perform better than multi-sector/multi-strategy hedge funds. Even though Visium Asset Management’s long stock picks performed worse than the market, four of its top five stock picks managed to beat the market. Visium Asset Management also used put options to hedge its exposure. These put positions helped Visium Asset Management to outperform the market since June. We believe investors can outperform the market over the long-term by focusing on Visium Asset Management’s best stock picks.