One of the most successful new hedge fund launches in the past few years is closing to new capital.
Averill Partners, a biopharma-focused long-short fund that operates independently under the Suvretta Capital Management umbrella, will stop accepting outside money beginning November 1, according to someone familiar with the fund. Averill declined to comment.
Biotech specialist Kishen Mehta launched Averill in the first quarter of 2020. Mehta had worked as an analyst at Evercore Partners, Apothecary Capital, and Adage Capital before spending nearly three years as a portfolio manager at Citadel’s Surveyor Capital.
Averill currently has $1.7 billion in assets under management. Since its inception, the fund has compounded at 385.8 percent, net of fees. In fact, in its first year, which spanned slightly more than nine months, it was up between 195 and 221 percent, depending on the share class, according to a fund communication at the time.
One major reason for Averill’s success is a deft ability to short stocks. This year, Averill is up 21.4 percent through September, including a gain of 70 basis points last month, making it one of the strategy’s top performers.
Averill seeks to identify companies that are developing products that could disrupt or threaten current methods for managing or treating diseases. It emphasizes small- to midcapitalization companies (SMID) and generally runs a low net exposure. For example, in the first year when the fund posted extraordinary results, it had a 250 percent gross exposure but just a 20 percent net exposure.
Its biggest drivers this year include Arcutis Biotherapeutics, a biopharmaceuticals company developing treatments for dermatological diseases; Biohaven, which focuses on treatments in immunology, neuroscience, and oncology; and Insmed, which is working on gene therapies for serious diseases.
Averill’s closing to outside capital does not affect Averill Madison, a newer and smaller health care fund — or Suvretta.
Averill Madison was launched in November 2022 and currently manages $225 million. It emphasizes long-term secular growth and innovation in health care, with a focus on mid- to large-capitalization companies. It generally has more of a long bias and covers a broader swath of health care companies than Averill. The fund climbed 29.2 percent this year through September and rose 5 percent last year, its first full year.
Suvretta was founded by Aaron Cowen in 2011. It has told clients in the past that it focuses on companies in the consumer/retail, technology, media and telecommunications, health care services, industrials, financials, and energy sectors. It has expanded this group in recent years to include defense, gaming, and electronic payments.