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Ghost Tree Capital’s AUM, Returns and Holdings

Jelena Martinovic

David Kim's Ghost Tree Capital is a health-care oriented hedge fund with a headquarter in New York. It was founded five years ago, back in 2013, by Ken Greenberg, Matt Diaz (Trader), Brian Kim (Senior Analysts), and of course David Kim. This large advisory firm provides portfolio management services for pooled investment vehicles and pension funds.

David Kim, who's also the fund's Portfolio Manager holds a Bachelor of Arts from the Harvard University, while he also obtained the Doctor of Medicine degree from the John Hopkins University School of Medicine in 2001. He served as a Portfolio Manager and Analyst at Ken Griffin's Citadel Investment Group from 2003 to 2006. Prior to founding his own fund, he worked as a Portfolio Manager at Richard Schimel's Diamondback Capital for six years alongside Ken Greenberg who also served there for 5 years as a Senior Analyst.

Ken Greenberg's educational background is definitely diverse and multi-disciplinary. He earned his B.A. degree at Duke University in 1997, where he pursued studies in Economics. In 2001 he graduated from the University of Pennsylvania School of Medicine, where he got his M.D. degree. Two years later he received MBA in General management & Healthcare from the Wharton School of the University of Pennsylvania. During his two-year residency in John Hopkins Hospital, he also worked as an Investment Banking Associate at Merrill Lynch & Co. for four months back in 2002. From 2005 to 2007 he was an associate in McKinsey&Compnay, while the following two years he was a Principal in MPM Capital.

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Ghost Tree Capital's AUM, Returns and Holdings

Since today's turbulent healthcare industry offers many challenges for those willing to invest in the healthcare industry, Ghost Tree Capital's investment strategy relies on disciplined financial analysis and fundamental primary research. The fund is focused on identifying good investments by researching and analyzing critical value drivers that have an effect on companies, competitive markets and therapeutic categories in the industry. After determining and evaluating long and short opportunities, the fund focuses on driving strong absolute returns, regardless of market cycles. While investing in healthcare stocks usually provide generous returns, it also carries a substantial risk, since there are many factors affecting stock prices.

For example, its Ghost Tree Partners, LP fund has witnessed fluctuating returns in recent years. It returned 12.99% in 2013, followed by 18.85% in 2014. However, 2015 was a challenging year for the fund since it returned only 0.59%. The 2016 returns were even more disappointing since the fund lost 2.02%. It significantly improved its performance in 2017 with a return of 9.46%, jumping to 15.02% through October 29, 2018. Ghost Tree Partners, LP fund has delivered a total return of 66.66% and a compound annual return of 10.22%, while its worst drawdown was 15.8%. As of October 2017, Ghost Tree Capital managed $321 million of assets of pooled investment vehicles and $37.24 million of institutional clients’ assets.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update. They are down about 8% since our update.

At the end of the third quarter Ghost Tree Capital’s equity portfolio was valued at $469.44 million, and counted 55 positions. The fund made a few changes to its portfolio during Q3, adding 22 new positions while also dumping 12 companies. Although this fund's stock picks are not among the most popular stocks in the third quarter, scroll through the list of 30 most popular stocks among hedge funds now, to check out the latest updates. Read more about the most significant changes the fund made to its portfolio during Q3 on the next page.

Let's start with the largest newcomers to the fund's portfolio. Besides being a new one, the position the fund held in Tesaro Inc. (NASDAQ:TSRO) an oncology-focused biopharmaceutical company at the end of Q3, is also among the top ten largest positions in its portfolio. The fund acquired 450,000 of the company's shares worth $17.55 million.  Then, we have an investment in a biopharmaceutical company Retrophin Inc. (NASDAQ:RTRX) as the fund bought 350,000 shares valued at $10.05 million.

The fund significantly lowered its stake in Global Blood Therapeutics Inc. (NASDAQ:GBT) during the third quarter, to 12,000 shares, worth around $456 thousand, which was down by 96% at the of the quarter. It remains to be seen if the fund will increase its stake in the company during Q4 since the company's shares went up 40% yesterday. The biotech company had reached an agreement with the U.S. Food and Drug Administration regarding the use of an accelerated approval pathway for a potential sickle cell disease treatment. Meanwhile, the fund also reduced its stake in Bluebird Bio Inc. (NASDAQ:BLUE) by 29% to 75,000 shares valued at $10.95 million.

And now, let's breeze through the largest positions Ghost Tree Capital held at the end of the third quarter. The fund increased Sarepta Therapeutics Inc. (NASDAQ:SRPT) stake by 20% to 210,000 shares worth $33.91 million. This medical research and drug development company occupied 7.22% of the fund's portfolio at the end of Q3. The fund actually lowered its stake in Ptc Therapeutics Inc. (NASDAQ:PTCT), which is one of the top three largest fund's holdings, by 26% to 500,000 shares worth $23.5 million, occupying 5% of its portfolio.

During the third quarter, the fund notably raised its stake in Zafgen Inc. (NASDAQ:ZFGN), a biopharmaceutical company developing treatments for Prader-Willi syndrome (PWS) type 2 diabetes, and liver disease. Ghost Tree Capital boosted its stake in it by 634%, to 750,000 shares, worth around $8.76 million.

The biggest positions Ghost Tree Capital decided to completely sell during the third quarter were in Mersana Therapeutics Inc (NASDAQ:MRSN), whose 600,000 shares the fund previously held and Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR), to whose 700,000 shares the fund said goodbye to.

Disclosure: None. This article was originally published at Insider Monkey.