Washington's 'unprecedented overreach' causing losses -asset manager Visium

Wed Apr 27, 2016 11:09am EDT
 
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NEW YORK, April 27 (Reuters) - Visium Asset Management, the approximately $7 billion investment firm led by Jacob Gottlieb, is blaming the U.S. government for some of its losses this year.

The Visium Balanced hedge fund, which focuses on healthcare stocks, lost money in March on Allergan Inc when a planned merger with Pfizer Inc collapsed because of concern the U.S. Department of the Treasury would block the deal, along with other so-called tax inversions.

"We did not expect the unprecedented overreach of the Treasury's authority and we incorrectly interpreted the Treasury as recognizing the limitations of its own powers," Visium wrote this month in a private letter to clients that was reviewed by Reuters. The letter said Visium had sold its Allergan shares following the news.

The fund also cited government concerns for losses on pharmaceutical company Endo International PLC. In its letter, Visium blamed the decline on concern that companies such as Valeant Pharmaceuticals International Inc, which acquire drugs and then raise their prices, could face increased regulation.

"Investors have been wary of buying into companies that are exposed to this pricing reform," the Visium letter said. "We believe ENDP is purely collateral damage from the VRX decline."

It said Endo's lower stock price "presents an opportunity, as it is well positioned to recover from its recent price weakness."

The Balanced fund is down nearly 8 percent this year through April 15, according to a report by HSBC's Alternative Investment Group.

Visium also suffered losses in its largest hedge fund, Visium Global, which bets on a variety of industries. The fund is down about 5.6 percent for the year as of April 15, according to the HSBC report.

Among the fund's losing bets was one against energy stocks as oil prices rallied, according to a separate letter to investors. The losses erased gains from its holdings of Swiss telecommunications company Sunrise Communications Group AG and hotel groups Starwood Hotels & Resorts Worldwide Inc and Marriott International Inc.   Continued...