Jason Karp’s Tourbillon Capital Partners recently filed a 13G form with the SEC indicating that it now owns 7.0% of the common shares of Recro Pharma Inc. (NASDAQ:REPH), 646,552 shares in all. This represents a new position for the hedge fund, as it did not report a stake in the company in its most recent 13F filing.
Tourbillon Capital Partners is a fundamentally driven long/short equity hedge fund established by Jason Karp in 2013. The firm employs a low net exposure strategy, implying that its long positions are relatively in balance with its short positions. Tourbillon has $4.53 billion in assets under management, which subsequently categorizes it as a large investment firm with assets above $1 billion, and is led by former SAC Capital Advisors portfolio manager, Jason Karp. Karp has previously worked at SAC’s CR Intrinsic unit as a generalist portfolio manager and director of research during the period of 2005 to 2009. After a relatively quick stop at Carlson Capital, where he served as co-chief investment officer, Karp launched his own shop in 2013 with roughly $250 million under management. Tourbillon’s most recent filing reveals that the fund’s top ten holdings represent 43.83% of its entire portfolio and that its holdings are diversified among the following sectors: 37.80% in the services sector, 19.22% in the technology sector, and 14.31% and 6.45% in the healthcare and consumer/non-cyclical sectors, respectively. The hedge fund manages a public equity portfolio with a value of $3.88 billion as of March 31, 2015.
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But why do we track the activity of hedge funds? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect the hedge funds’ activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small cap stock picks among hedge funds also bested passive index funds by around 80 percentage points over the 34 month period, beginning in September 2012 (read the details here).
Recro Pharma Inc. (NASDAQ:REPH) is a clinical-stage specialty pharmaceutical company that focuses on developing non-opioid therapeutics for the treatment of pain, initially intended for post-operative pain. As of now, the company has two product candidates in late stage clinical trials for the management of acute post-operative pain. The first product candidate is the recently-acquired IV/IM meloxicam, which is a proprietary, long-acting preferential COX-2 inhibitor that has successfully completed multiple Phase II clinical trials and is ready to begin the vital Phase III clinical trials. The second product candidate is Dex-IN, which is a proprietary intranasal formulation of dexmedetomidine.
