Medical/Biotech hedge fund opportunity: Sio Capital
Hedge funds aren't for everyone, and in fact most hedge funds have fairly restrictive rules regarding who they can and will accept as investors. But for those of you who are at least "accredited investors" and looking for some low-beta (not highly correlated with the stock market) diversification of your portfolio, I would suggest you take a look at Sio Capital.
Sio is managed by Dr. Michael Castor, formerly a senior medical company researcher for the oustanding and highly-regarded Sanford C. Bernstein and Company. Prior to going into finance, Michael received his MD and trained as an Ear, Nose, and Throat surgeon, including a residency at Columbia University Medical School.
A recent article at InsiderMonkey.com puts it this way: "There are thousands of hedge funds in action today--about 8,000 to be exact--but there are those that stand out amongst the crowd. Michael Castor's Sio Capital is one such stand-out, and we've chronicled his mastery of Mr. Market before."
Sio uses a highly disciplined approach, including detailed research and intense use of a proprietary database model, to select a portfolio of approximately 30 long positions and 30 short positions to manage the fund as roughly "market-neutral," giving the fund a Sharpe Ratio of nearly 1.5 and a beta under 0.2.
In other words, while any investment can have a bad day, week, month, or even year, Sio offers (with the exception of some underperformance in 2010) a history of solid performance and moderate-to-low volatility.
The management fee structure is 1.5%/20%, and the minimum investment is $1 million, though I imagine they would be open to discussing smaller investments in certain cases. Sio is currently approaching $50MM under management.
For those of you in New York, Michael will be the first presenter (9:10 AM) on September 16th at this year's Value Investing Congress.
Again, I wouldn't be suggesting this if I were not a believer, and more than that -- an investor. As I said, hedge funds aren't for everyone, but if this might be a fit for you, please contact Albert Vigneau, Sio Capital's Chief Financial Officer, for more information.
- Michael Castor is my former brother-in-law.
- I have been an investor in the fund since a few months after it opened in 2006 and remain so today.
- I have no financial arrangement with the fund such as "finders fees" or a "consulting" contract; no financial connection to the fund other than as an investor.
- I have encouraged friends and relatives to invest in the fund over the years and several have done so.
- Nobody at the fund has asked me to write this note.
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