Opportunistic sTRATEGIES

Healthcare

why invest in healthcare
Offers public-market investors access to a sector undergoing a secular innovation cycle, ripe with investment opportunities and the potential for long-term capital appreciation. The tailwind of a rapidly aging population, the need for innovative approaches to cancer and other age-related diseases and a favorable regulatory environment will likely fuel industry growth for years to come.
our edge

Why Nicholas Healthcare Opportunities

Focus: specialize in dynamically growing small- and mid-cap companies
Insights: invest in both equities and convertibles for a holistic view of company
Discipline: combine breadth of quantitative tools with traditional fundamental equity and credit analysis
Alignment: constrain capacity to add value and invest alongside clients
Experience: principals have been managing portfolios for over 30 years
LEAD PORTFOLIO MANAGER
Lisa Wheatley
resources
PORTFOLIO MANAGER
Catherine Nicholas
PORTFOLIO MANAGER
John Wylie
our approach

Investment Philosophy

We believe that dynamic change often creates a disconnect between a company’s future earnings power and its stock’s valuation. Growth catalysts are often not fully understood and expectations tend to be adjusted upwards gradually. We seek to exploit this inefficiency by investing in dynamic companies exhibiting signals of change that will lead to an acceleration in revenue and/or earnings growth in which our research confirms the company’s growth is sustainable and its stock is a timely investment.

Portfolio Construction

Portfolios are actively managed to continually drive to the strongest investment ideas. Position sizes are based on the conviction in the investment thesis of each company relative to other portfolio holdings and risk exposures. Early warnings signs that suggest deterioration in company fundamentals or earnings strength lead to timely sell decisions.

Risk Management

Risk analysis is essential to minimize uncertainties and enhance potential long-term gains for client portfolios. To understand intended and unintended sources of risk, our investment team leverages quantitative tools with experience, judgment and deep knowledge of the holdings within a portfolio on a daily, weekly and monthly basis.

Typical Investment Policies

Number of Positions:  40–75
Geography:  US-listed public equities, ETFs, preferred securities, and convertible bonds
Capitalization:  Greater than $100M
Security:  Max 15%
Hedging:  May hedge healthcare-related ETFs and short individual securities to exploit short-term opportunities, up to 20% of the portfolio market value
Cash:  Transactional, typically <5% (max 20%)

Driver of Expected Return

Bottom up, research-driven stock selection. Industry weights and factor exposures are a residual of the stock-selection process.
inception date
January 1, 2017
vehicles
Separately managed account
videos
(3:24) Lisa highlights why our firm’s San Diego location is an edge in her healthcare-company research and why early-stage biotechnology and medical device companies can produce private equity-like returns to public-market investors. In contrast to other sectors, particularly technology, these companies come to the public markets sooner to fund the costs of product development and regulatory approval. Therefore most of the upside can be experienced later in a company’s lifecycle, and—importantly—after data read-outs and other performance metrics de-risk much of the uncertainty around the technology and management team.
(5:54) Learn about specific disruptive technologies leading to a renaissance of innovation across the healthcare sector. Examples Lisa discusses include Car-T cell therapies, CRISPR/Cas9 gene-editing technology, gene therapy, robotic surgical technology, and the harnessing of “Big Data” to improve patient outcomes and ultimately reduce costs to the healthcare system.
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