Fall In Healthcare Blamed for Huge Dispersion Among Long/Short Hedge Funds

New York (HedgeCo.net) – The healthcare sector has been on a true roller coaster ride this year with the sector gaining almost 14 percent through the first six and a half months of the year, but then it fell over 16 percent from mid-July in to late September. The sector has bounced back in the last month, gaining over 10 percent since September 28.

That roller coaster ride for the sector has created a great dispersion in the performance between hedge funds that use a long/short equity strategy. A recent report from Mark Connors, an analyst with Credit Suisse, suggested that the healthcare sector alone could be dictating whether or not a hedge fund is having a good October or a bad one.

Connors’ research suggest that October could go down as having “elevated, if not all-time high dispersion of monthly returns for Equity L/S and other strategies”. His calculations show that the performance differentials between being bullish on healthcare or being bearish on the sector could have been as much as -7.4 percent if a fund was overweight the sector versus +11.5 percent if a fund was bearish toward the sector.

Rick Pendergraft
Research Analyst
HedgeCoVest

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