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Deerfield Management Company

Last Updated: 12/3/2020

Deerfield Management Company is a Limited Partnership that started in 1994 and is primarily owned and controlled by James E. Flynn.

Per it's ADV, Deerfield conducts extensive fundamental research into healthcare sector investment opportunities, including research on individual companies, products and services, drug and device development pipelines, early stage medical research at academic and other research institutions, clinical trials, specific product and service markets, intellectual property protection and litigation, political and regulatory developments, and the dynamics of public securities markets. The Firm makes use of this fundamental research to identify investment opportunities, determine how best to structure or “express” an investment thesis, direct the purchase and sale of securities, negotiate structured investment transactions, and generally manage and invest the assets of the Funds. analysis and fundamental proprietary research. As part of HCM’s bottom-up analysis, it performs both qualitative and quantitative assessmen

The majority of Fund investments are made in companies that are organized in the United States or that issue securities available in the U.S. public securities markets. The emphasis on U.S.-based opportunities reflects the fact that the Firm is more knowledgeable about U.S. companies, product and services markets, securities markets, and reimbursement and regulatory dynamics. There is no geographic limitation on potential investments, and the Funds also make investments outside the United States when the Firm believes it has sufficient information to make such investments.

Deerfield Management Company operates out of an office in New York, NY. Based on the Form ADV filed on 2020-03-30 00:00:00, the investment firm is comprised of 146 employees, only 106 of whom performs investment advisory functions.

Fact Sheet

      Name: Deerfield Management Company
      CRD No: 157876
      Filing Recorded: 2020-03-30 00:00:00
      Year of Origin: 1994
      Employees: 146
      Clients: 10
      AUM: 182,633,760
      Management Fee: .5 to 1.75 Percent
      Performance Fee: 20-25 Percent
      Client Type: Pooled Investment Vehicles
      Assets Traded: Unspecified


Investment Strategy

According to the brochure submitted to IAPD, Deerfield Managements investment strategy is as follows:

The Public Securities Strategy invests primarily in debt and equity securities, including derivative securities, of publicly-traded companies in the healthcare and healthcare related sector. When implementing the Public Securities Strategy, the Firm seeks to achieve capital appreciation through a portfolio strategy that combines security selection based on in-depth fundamental analysis of healthcare companies, and a diversified portfolio comprising stock, debt, and derivative securities and a mix of long and short positions. The Firm considers the following factors when making investment decisions and designing a portfolio for this Strategy.

Healthcare Universe. At least 90% of investments made for this Strategy (and the other Strategies as well) is expected to be in healthcare securities, and in practice the Funds have invested almost exclusively in the healthcare sector.

Leverage. Total exposure varies from time to time based on market factors and the constantly varying mix of investment opportunities.

Diversification. The portfolio consists of a relatively large number of positions, with 1% to 3% of total Fund assets representing the typical size of an individual investment. The Firm customarily invests across a number of healthcare industry segments. The Firm does not invest more than 12.5% of the net assets of Deerfield Partners, L.P. (computed at the time the investment is made) in the securities of any one company.

Balance. The portfolio usually has a net long exposure, but its long and short positions may vary significantly from time to time, and past exposure may not be indicative of future exposure. At any given time, the portfolio is likely to include positions in equity, debt and derivative securities. Geographically, the portfolio is expected to be weighted toward U.S.-based healthcare companies, but it may include substantial non-U.S. exposure. Exposure to foreign investments varies with prevailing investment opportunities.

Holding Periods. Holding periods of both long and short positions are determined by the underlying investment thesis and developments in the relevant securities. The Firm attempts to realize long-term capital gains for domestic taxable investors where possible and prudent.

Risk. The Firm may take above-average risk in particular situations if the risk-adjusted return justifies the exposure. The risk inherent in any one investment is mitigated to a degree by the diversity of the portfolio within the healthcare sector.

Use of Derivatives. The Firm uses exchange traded derivative instruments or other derivative instruments, including bilateral swaps, when and to the extent they provide the best means of achieving desirable risk-adjusted returns, sometimes in combination with other securities. Currency forward contracts may also be used to hedge currency risk.

Private Market Financing. The Public Securities Strategy focuses primarily on publicly traded securities. It also invests in tradable syndicated debt and in privately structured financings of publicly-traded companies where liquidity may be restricted. Private securities with restricted liquidity in excess of three months represent no more than 15% of net assets of a Deerfield Partners, L.P., determined at the time the investment is made.

Methods of Analysis

In addition, Deerfield Managements methods of analysis include:

The primary determinant of the Public Securities Strategy’s success is the ability of the Firm to assess the value of companies and assets within the healthcare securities universe. The Firm pursues in-depth fundamental research of potential investments by developing detailed analytical models, visiting companies, attending medical conferences and investment seminars, reading medical and trade literature, reviewing intellectual property, consulting with individuals possessing relevant expertise, surveying participants in the healthcare field and analyzing data.

Top 10 Holdings from Form 13F

Reporting Period: 09/30/2020

Issuer Share Value(1000s) Put/Call
INVITAE CORP 163,385,000 267,693
MYLAN NV 13,274,000 196,853
IMMUNOMEDICS INC 2,304,900 195,986
NEVRO CORP 115,776,000 172,933
ACUTUS MEDICAL INC 4,341,799 129,386
CENTENE CORP DEL 1,828,000 106,627
MYOKARDIA INC 704,000 95,976

Historical 13F Filings

EdgeGiant has compiled all 13F filings since Q2 2013 for your convenience. You can view historical portfolio position forDeerfield Management Companyin our 13F section HERE.

To get the comprehensive list of holdings that fall under 13F regulatory guidelines, check out our write up on how to access and use 13Fs in your personal investment decisions.

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Historical Portfolio Holdings for Deerfield Management Company