Meet the secretive biotech hedge fund whose elite clients include the Tisch family, Yale's endowment

Published Fri, Aug 19 20221:11 PM EDTUpdated Fri, Aug 19 20222:40 PM EDT

A little-known New York-based hedge fund, specializing in biotech investing, has been turning in impressive returns for a handful of elite clients including Yale University's endowment and the Tisch family. Baker Bros. Advisors, founded by brothers Julian Baker and Felix Baker, managed nearly $20 billion in equity assets as of the second quarter, ranking the 15th-biggest portfolio among U.S. hedge funds, according to FactSet. Baker Bros.' equity portfolio is larger than Chase Coleman's Tiger Global and just a couple billions smaller than Carl Icahn's hedge fund. The brothers' personal wealth grew as the hedge fund became a success. Julian Baker now has a net worth of $2.6 billion, according to Forbes. Despite the fund's growing size and stellar performance, Baker Bros. has managed to stay under the radar. The brothers, now in their early 50s, have never done press and they don't even have a website for their investment firm. Still, the brothers landed some of the most high-profile investors in the U.S. during the early days of their careers. They started managing health-care investments for the Tisch family in 1994. Yale's charitable foundation has invested in 667 LP, a Baker Bros. vehicle, since at least 2009. The Bakers, who have an educational background in immunology, took advantage of the explosive growth in the biotech sector over the past decade. Baker Bros. Advisors' runs a health-care-only hedge fund with 118 equity holdings at the end of the second quarter, according to a new regulatory filing. Its portfolio has a very small turnover rate and many of its biotech picks have pulled off massive returns. One of Baker's most lucrative bets have been Seagen , a biotech firm developing cancer treatments. They first bought Seagen in the early 2000s and over the years increased their stake. Now they've become the biggest shareholder of Seagen, owning 47% of the company with a stake worth more than $8.3 billion as the end of June. The stock has rallied more than 550% over the last 10 years. Global biopharmaceutical company Incyte is their second biggest holding worth $2.7 billion at the end of the second quarter. The brothers have owned this story for at least 10 years, enjoying a 291% return. The brothers were also early investors in Chinese-American drug developer BeiGene . Amgen took a minority stake in the company in 2019, sparking a huge rally in the stock. The company's ADRs have gained nearly 600% since its U.S. IPO in 2016.