By Nell Mackenzie
LONDON (Reuters) -Brevan Howard has made a $200 million commitment to Catalio Capital Management’s healthcare stock fund, two sources close to the matter said, in the latest example of one of the world’s biggest hedge funds investing in other funds.
A Goldman Sachs report last month said that while just over half of multi-managers invested in other hedge funds in 2022, this had jumped to almost 75% as of October, in one of the most significant trends in the sector in recent years.
Deal details are often as closely guarded as the industry’s performance metrics and only available to hedge fund investors.
The Catalio Public Equities fund in which Brevan Howard is investing is part of Catalio Capital Management, a $2.3 billion New York-based healthcare investment firm that invests in stocks and bonds across private and public markets, one source said.
Macro hedge fund Brevan Howard is a private investment firm, which bets on the value of assets rising as well as falling.
Catalio Capital Management, in which private equity firm KKR invests, says on its website that it is focused on healthcare and was co-founded by George Petrocheilos and Jacob Vogelstein.
Ben Snedeker, a former D.E. Shaw portfolio manager with degrees in chemistry from Pennsylvania State University and Yale, runs the Catalio Public Equities fund, it adds.
Under the deal, Brevan Howard will be responsible for the risk, but the Catalio Public Equities fund will do the trading, the two sources said, adding that investment terms will be agreed through what is known as a separately managed account.
Catalio says its healthcare-focused stocks fund takes long and short trading positions on global stocks including drugs, devices, diagnostics and data companies.
It posted 12% returns net of fees from the start of this year to October 31, said one of the sources, who could not be identified as hedge fund returns are private. Since inception in 2023, it has returned 49% net of fees, the source added.
Brevan Howard, founded in 2002 by Alan Howard and a group of former Credit Suisse traders, manages about $34 billion. Led by CEO Aron Landy, its clients include sovereign wealth funds as well as corporate and public pension plans.
Brevan Howard recently added new trading firepower from Abu Dhabi alternative investment manager Lunate, which in August took an initial $2 billion minority stake, with more capital to be raised from local and international investors “over time”.
Reuters could not establish how any gains or losses it might make from Catalio would be distributed among investors.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and Alexander Smith)
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