Key Takeaways
- • Avidity Partners posted a 14% return in Q1 2020, significantly outperforming broad market indices during a period of significant equity market volatility, with year-to-date returns of 26% from its November 1, 2019 launch through March 2020.
- • The long-short equity fund launched with $750 million and has grown to over $1 billion in assets under management within its first five months of operation, demonstrating strong investor confidence in the health-care specialist strategy.
- • Co-founders David Witzke (formerly Citadel) and Michael Gregory (formerly Highland Capital Management) lead the firm, bringing institutional-grade portfolio management expertise from two prominent alternative investment firms.
- • Avidity specializes in long-short exposure across therapeutics, medical technology, diagnostics, and life sciences companies, positioning the fund to capitalize on the health-care sector's relative strength during market dislocation.
- • The firm plans to close fundraising in June 2020, signaling management's intent to cap assets and maintain strategy flexibility as the fund matures.
Summary
Avidity Partners, a Dallas-based long-short equity hedge fund, has delivered compelling early returns in an otherwise challenging market environment. The fund posted a 14% return in the first quarter of 2020 and achieved a 26% cumulative return from its November 1, 2019 inception through March 31, 2020—a period during which the S&P 500 Index declined approximately 15% and the SPDR S&P Biotech ETF fell more than 5%, according to Bloomberg.
The fund's outperformance reflects both its specialized investment thesis and disciplined execution during market stress. Co-founded by David Witzke, a former portfolio manager at Citadel, and Michael Gregory, previously with Highland Capital Management, Avidity has attracted investor capital through a differentiated health-care investment strategy. The firm focuses on long and short positions across therapeutics, medical technology, diagnostics, and life sciences companies, positioning itself to benefit from sector-specific opportunities and downside protection through selective short exposure.
Asset growth has been rapid and substantial. Avidity launched with $750 million and has accumulated more than $1 billion in assets under management within five months—a testament to investor appetite for health-care-focused hedge funds and the execution quality demonstrated during volatile markets. Management has indicated plans to pause fundraising efforts in June 2020, suggesting a deliberate scaling strategy aligned with maintaining portfolio liquidity and investment discipline.
The timing of Avidity's launch proved fortuitous, as the health-care sector emerged as a relatively resilient area during the March 2020 market selloff. The firm's dual long-short framework and specialized focus on emerging therapeutic treatments and medical innovation positioned early investors to benefit from both sector tailwinds and disciplined risk management during a period when many hedge funds experienced significant drawdowns.
The fund's outperformance reflects both its specialized investment thesis and disciplined execution during market stress. Co-founded by David Witzke, a former portfolio manager at Citadel, and Michael Gregory, previously with Highland Capital Management, Avidity has attracted investor capital through a differentiated health-care investment strategy. The firm focuses on long and short positions across therapeutics, medical technology, diagnostics, and life sciences companies, positioning itself to benefit from sector-specific opportunities and downside protection through selective short exposure.
Asset growth has been rapid and substantial. Avidity launched with $750 million and has accumulated more than $1 billion in assets under management within five months—a testament to investor appetite for health-care-focused hedge funds and the execution quality demonstrated during volatile markets. Management has indicated plans to pause fundraising efforts in June 2020, suggesting a deliberate scaling strategy aligned with maintaining portfolio liquidity and investment discipline.
The timing of Avidity's launch proved fortuitous, as the health-care sector emerged as a relatively resilient area during the March 2020 market selloff. The firm's dual long-short framework and specialized focus on emerging therapeutic treatments and medical innovation positioned early investors to benefit from both sector tailwinds and disciplined risk management during a period when many hedge funds experienced significant drawdowns.
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