Seligman Investments, a division of Columbia Threadneedle Investments, has unveiled a new hedge fund specifically focused on healthcare stocks. The Seligman Healthcare Spectrum Fund and its offshore counterpart have commenced trading this week, backed by $10 million in internally sourced capital. The fund is actively seeking additional investment from external investors, according to a reliable source familiar with the launch.

Investment Strategy

The long-short strategy of the Seligman Healthcare Spectrum Fund will span various sectors within health care, with a pronounced emphasis on biotechnology. Approximately 60 percent of the fund’s capital allocation is earmarked for biotech investments. The remaining funds will be broadly distributed across small and large companies involved in medical devices, health care services, managed care, hospitals, life sciences tools, diagnostic equipment, and medical tests, among other areas.

Portfolio Exposure

While the portfolio’s net long exposure is expected to fluctuate between 40 and 70 percent, the actual positioning will likely lean toward 85 percent long and 40 percent short. The fund management has also communicated to investors that during periods of market exuberance, the net long exposure could be as low as 20 to 30 percent.

Leadership and Expertise

The Seligman Healthcare Spectrum Fund will be led by Kosta Kleyman, who brings extensive experience in the life sciences industry. Kleyman previously served as a healthcare portfolio manager and biotech analyst at Seligman Investments. His background includes stints at hedge fund Acuta Capital as well as roles with AstraZeneca, Genentech, and Allergan. Over the past several years, Kleyman has been actively involved in managing the Seligman Tech Spectrum Master Fund, particularly focusing on healthcare investments from the short side.

Timing and Context

The fund’s launch coincides with an intriguing period for healthcare stocks. After experiencing significant declines in previous years, life sciences, biopharma, and related healthcare equities have shown signs of a resurgence since early November. While many specialized hedge funds in these sectors have recovered partially from earlier losses, the question remains whether this recent rally represents a cyclical upswing or the beginning of a sustained bull market for healthcare stocks.

Conclusion

The Seligman Healthcare Spectrum Fund aims to capitalize on opportunities within the dynamic healthcare sector. With a seasoned team at the helm and a strategic focus on biotechnology, the fund enters the market during a pivotal time for healthcare investments.