Biotech Hedge Funds: an Investment Analysis

The initial goal established at the commencement of the research was to build a novel hedge fund investment thesis that exploited information asymmetries over short-term windows. This study commenced in mid-2009, at the early stages of the recovery of the US economy (which is debatable) following the 2007-2008 financial and economic crises. We were presented a unique opportunity to explore the successes and failings of hedge funds in general through the years immediately preceding the crisis. We were hoping to uncover sector-specific investment theses which demonstrated a strong competency in hedging during the recent economic shock and to determine whether robust hedging always comes at the cost of upside participation. Further, we hoped to identify investment theses that thrived by employing speculative directional trading strategies and to explore their exposures/risks? Our research establishes a solid framework for analysis of biotech hedge funds and revealed clear possibilities for creating trading systems with an edge.