He Plays It Safe--and Wins Big

Biotech is among the global market's most volatile sectors. But Rudi Van den Eynde, the manager of Dexia Equities L Biotechnology fund, is no gambler. His picks are relatively conservative and mostly American. That paid off in the second quarter, when his fund, part of the Belgian-French Dexia Asset Management group, topped the 500 offshore investment funds BusinessWeek tracks. Van den Eynde's Luxembourg-registered biotech fund rang up a 37.6% return.

The stocky, soft-spoken 37-year-old works out of a circa-1900 office building on Brussels' Rue Royale, near Belgium's royal palace. His personal pedigree is as straight-up as his office address: His father was a Belgian army officer, and Van den Eynde himself planned to be a military doctor before switching to finance. "Rudi certainly isn't a cowboy," says colleague Patrick Vandenhoute.

Military precision and prudence fostered Van den Eynde's recent success. All but four of his 45 investments are in U.S. companies. He stays away from Germany's Neuer Markt, which he sees as a home for overvalued, badly managed wanna-bes. "The Europeans are good in science, but they remain too far away from developing real products," he says.

Van den Eynde instead buys companies with products in advanced clinical testing. His largest single holding is Cephalon Inc. It has begun selling a new antinarcolepsy pill, Provigil, which has few side effects and few, if any, competitors. Its share price soared in the last quarter, from $45 to $73. An even bigger winner has been Xoma Ltd., which got positive results from a psoriasis treatment in Phase 3 trials. Its stock was up 130% in the second quarter. A third holding, Immunomedics Inc., doubled in value after it reported progress with a leukemia drug.

Within Dexia Asset Management, Van den Eynde is a star. He is the manager of five funds, all of which have performed in the top third of their peer groups. But Van den Eynde's first love remains biotech. "Biotech will ride out the overall tech downturn much better because if you develop a new drug, people will buy it--economic recession or not," he says. Yet he warns that biotech is risky. Inspired to sink a big chunk of your cash into his fund? Stop, says Van den Eynde, at 5% of your savings.

By William Echikson in Brussels

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