Two brothers, a big biotech bet and an $8 billion payout
A two-decade bet on a biotechnology company turned into a roughly $8 billion windfall for investors in a New York hedge fund earlier this year. Baker Bros. Advisors, a hedge-fund firm run by brothers Felix and Julian Baker, had in 2003 invested in Seagen, a developer of next-generation cancer treatments.
Pfizer bought the company for $43 billion last year. The firm held a nearly 25% stake in Seagen and reaped about $10 billion in proceeds when the acquisition closed in December. It gave back most of that to its investors earlier this year, people familiar with the matter said, in what was one of the industry’s largest ever returns of capital.
Big-ticket takeovers and scientific advances like gene-editing helped make biotech investing a hot hedge-fund strategy last year. A healthcare stock-picking index gained 13.3% in 2023, according to hedge-fund research firm PivotalPath, outpacing the 7.6% rise in a broader industry index. Baker Bros.’s flagship fund gained roughly 19% in 2023, some of the people said.
The Bakers, known for being intensely private, are a throwback to a leaner, freewheeling style of hedge-fund investing. While today’s most sought-after hedge funds divvy money up across battalions of traders, Baker Bros. employed around 18 investment professionals to manage about $22 billion in assets at the end of 2023, regulatory filings show.
Other hedge-fund chiefs minimize risk by avoiding concentrated bets. At Baker Bros., Seagen accounted for about half of the value of its publicly disclosed stockholdings at the end of September. That approach often comes with volatility, especially in a boom-or-bust sector like biotech.
Read more on livemint.com
