Visium Funds Fall as Pharmaceutical, Energy Weigh on Portfolios

  • Endo, Allergan push Visium Balanced to third month of losses
  • Endo `is purely collateral damage' from Valeant, letter says

Visium Asset Management’s biggest funds extended losses in March as positions in pharmaceutical companies Endo International Plc and Allergan Plc sank.

Visium’s Balanced Fund -- a long-short equity fund that invests in healthcare companies -- posted a third straight month of losses and fell about 2 percent in March, bringing declines this year to 7.3 percent, according to a letter to investors obtained by Bloomberg. The firm manages about $4.05 billion under the strategy.

The hedge fund, which was founded in 2005 by Jacob Gottlieb, a medical school graduate, exited its position in Allergan, according to the letter. The company fell 14 percent in the first quarter as it ended its $160 billion merger agreement with Pfizer Inc. Endo shares plunged 54 percent in the quarter on concern the drug pricing and accounting issues facing Valeant Pharmaceuticals International Inc. may affect the whole sector.

Endo ’Opportunity’

Endo “is purely collateral damage from the VRX decline and presents an opportunity,” the letter said. “It is well positioned to recover from its recent price weakness.”

The firm’s $2.4 billion Global Fund, which wagers on stocks across many sectors, fell 5.4 percent in the first quarter, pulled down by bets against energy, mining and financial companies, according to a separate letter. A rally in energy and materials stocks caused the firm to cut gross exposure, the firm said in the letter, even as it remains short companies that are impacted by China.

"With continued negative data out of China, we expect these stocks to selloff and we do not foresee earnings improvement in the near term," the firm wrote.

The losses are adding pressure at the firm as it faces regulatory scrutiny. Gottlieb told investors in a letter last month that the firm is under investigation by the U.S. Securities and Exchange Commission and the Justice Department into the trading of certain securities, including the use of a consultant who stopped providing services to the firm in 2011.

This year’s performance follows a strong showing for the firm in 2015. Its Balanced fund gained 5.5 percent and the Global Fund jumped more than 10 percent.

Before it's here, it's on the Bloomberg Terminal.