Global HealthcareGlobalHealthcare

Investment Philosophy

We believe healthcare sits at the intersection of technology and consumerization, creating a dynamic environment with significant opportunity to source innovation and generate alpha. 

Jennison’s Global Healthcare investment offering is a long/short equity strategy that is industry, market cap, and geographically agnostic, focused on innovative products, devices, and services that the investment team believes will dramatically improve the healthcare ecosystem. 

Our value proposition as a manager of a long/short healthcare strategy is seeking to take advantage of upside volatility while simultaneously striving to manage downside volatility in difficult market environments. Our goal is to deliver the best of both worlds between pure market neutrality and highly correlated long bias returns of our peers.

Investment Process

Our portfolio is constructed from bottom up fundamentally driven ideas for both long and short positions. For long positions, we focus on innovative products, devices, and services that we believe will dramatically improve our healthcare ecosystem. This can be anything from a drug that improves the outcomes for a given disease to a device that is less invasive and more efficacious or a service or model that improves the quality of care while lowering its cost. For short positions, we look for the inverse of our longs; inferior products or those that will be replaced by innovation, weak management teams, or over-levered balance sheets, for example. Ultimately, the Global Healthcare strategy seeks absolute alpha-driving positions for both longs and shorts.

Portfolio Construction

Jennison follows a dynamic approach supported by disciplined risk management to manage the Global Healthcare strategy. While the investment process is rooted in bottom-up fundamental analysis to identify long and short positions based on company-specific attributes, quantitative data provides an additional lens to inform position sizing and risk management. Analyzing a position's factor makeup allows us to understand its drivers of return from a quantitative viewpoint. We can then weigh the factor exposures of the overall strategy to seek a desired factor risk profile.  

Individual stock betas help quantify relative volatilities. We can use beta to right-size positions according to their idiosyncratic risk contributions, ensuring proper diversification and appropriate risk-adjusted sizing across the portfolio. The result is a fundamentally driven long/short portfolio that leverages quantitative insights to help enhance risk-adjusted returns. 

Risk Management

We believe the most effective way to achieve a reliable and consistent return stream is through constructing a portfolio that fully leverages specific risk. We manage risks through a robust framework at the position, industry, and portfolio level. Both our portfolio and industry net/gross exposure is informed by multiple economic and quantitative factors.

Our approach seeks to create a portfolio with aggregate characteristics such as a higher Sharpe ratio, reduced volatility, and lower correlations with broader market indices.