Woodline Partners was founded by three former Citadel portfolio managers and traders in 2018, and the equity-driven hedge fund has racked up annual gains between 10.2 percent and 14.4 percent in its first four full years. It is on pace to fall somewhere in that range again this year after posting a 10 percent gain through September.
Perhaps more important, Woodline has deftly maneuvered through the stock market’s volatility and downturn over the past few years. It has not suffered an annual loss and has been profitable every quarter since its launch, including all five quarters when the S&P was down. The biggest decline in a single month is 90 basis points.
When the S&P 500 lost 19 percent in 2022, Woodline was up 10.4 percent. The fund also climbed 10.2 percent the previous year, when many technology-driven hedge funds lost money. This is significant given that many of those tech funds are still well below their high-water marks.
Woodline declined to comment.
The firm is headed by Mike Rockefeller, Karl Kroeker, and Matthew Hooker, who all worked at Citadel Global Equities. Rockefeller was the health care portfolio manager in San Francisco, Kroeker was the regional head in San Francisco, and Hooker was the head of U.S. trading.
Woodline launched with $2 billion and currently manages nearly $8.5 billion, making it perhaps the largest recently launched hedge fund firm that few have heard of. It started with about 30 employees and now has approximately 85. It has a traditional long-short strategy and is incubating a long market fund, Woodline Spire, that is benchmarked to the S&P 500.
The firm fashions itself as a fundamental equity–oriented market-neutral fund with a subsector specialized structure. Its net long exposure is generally about zero.
Woodline currently has about 25 individual teams, each overseeing about 50 stocks. When it launched, the fund was heavily concentrated in tech and health care stocks. Today the two sectors combined still account for about two-thirds of capital. The capital is allocated broadly to the teams, and the firm has diversified into consumer, energy, financials, and industrials over time.
The health care teams cover life sciences tools and diagnostics, medical devices, pharmaceuticals and biotech, and services and animal health. The tech teams cover cable, media, and telco; hardware and communications; industrial technology; internet and gaming; semiconductors and components; semiconductors and test equipment; and software. At the end of June, Woodline’s U.S. portfolio held 545 different individual stocks valued at more than $10 billion, according to the most recent 13F filing.
The top-ten positions accounted for only a little more than 14 percent of those assets. The two largest long positions at the end of June were drug makers Eli Lilly and Regeneron Pharmaceuticals, followed by energy company Ovintiv.
All of Woodline’s returns come from the long portfolio. The firm uses shorts mostly to hedge market risk. Notably, Woodline’s health care teams have been profitable every year even though many other dedicated health care and biopharma hedge funds lost large sums in a few of those years.