RA Capital’s 13F Stock Holdings & Strategy

Updated on October 9th, 2020 by Nikolaos Sismanis

Founded in 2002 by Peter Kolchinsky and Rich Aldrich, RA Capital Management is a Boston based hedge fund specializing in multistage life science investments. The fund holds around $5.1 billion in assets under management (AUM). The firm is comprised of professionals with training in biology, chemistry, and medicine while having industry experience at the executive and board levels.

Investors following the company’s 13F filings over the last 3 years (from mid-August 2017 through mid-August 2020) would have generated strong annualized total returns of 20%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 11.9% over the same time period.

Note:  13F filing performance is different than fund performance.  See how we calculate 13F filing performance here.

You can download an Excel spreadsheet with metrics that matter of RA Capital Management’s current 13F equity holdings below:

 

Keep reading this article to learn more about RA Capital Management.

Table Of Contents

RA Capital Management’s Strategy & Values

RA Capital is a unique hedge fund, as 100% of its portfolio investments are allocated in the healthcare sector. The company holds years of expertise in the industry and is dedicated to evidence-based investing in listed and non-listed life science companies in the various stages of developing drugs, medical devices, and diagnostics.

Their strategy includes providing seed capital to startups, leading private funding rounds, and staying by a company’s side through their journey towards an IPO. RA Capital’s unique insight in the sector allows companies to take their early ideas from the labs to a commercialized product.

What differentiates Kolchinsky and his team from other hedge funds is their expertise on RNA, protein-folding correctors, and gene therapy are rare, and doubly so when that knowledge is combined with finance and investing expertise. With most funds focusing on more convectional investment ideas, quite often mimicking the major indices, Ra Capital offers its clients an alternative investment strategy that bypasses the overall market’s systematic risk and returns.

The firm’s values stand on being conscious about the ways in which RA interacts with both its own people and those outside the company. Mr. Kolchinsky has a set of a clear set of principles for RA, by which working relationships are founded on trust, collaboration, diligence, and integrity. Mr. Kolchinsky believes this is how everyone’s potential is maximized, and strong relationships are built.

Portfolio & Private Investments

Since the fund helps guide small firms when they are getting started and hopes to achieve an IPO, RA Capital holds both public and private companies. The public equities part of the fund currently has 48 stocks, the top 10 of which account for nearly 55.3% of the total weight. The company’s strategy is reflected in these holdings, as most of them are straight out of their IPO phase, with very short trading history, and an average market capitalization of around $4 billion. As mentioned, 100% of the holdings are in the life sciences sector.

Many of the funds holding, though, are not listed, and consist of private investment in their early stages, before commercialization. Out of RA Capital’s 130+ private investments, nearly 80 have resulted in a successful exit, which is a testament to management’s skills in identifying diamonds in the rough early on and nurturing them.

Some of the company’s private highlights include the following investments:

Novavax, Inc. (NVAX)

Despite being a publicly listed company, RA entered into a $200 million private funding round earlier in June, as Novavax was in need of capital. RA’s expertise and value-creation in the sector quickly materialized, as shares are currently trading nearly 3 times higher since.

Moderna, Inc. (MRNA)

Moderna has been occupying the investing headlines over the past few months, as the company is seemingly making rapid progress when it comes to a COVID-19 vaccine. The company has been publicly listed for nearly two years, in which period shares have rewarded investors with multi-bagger returns. RA Capital invested in the company back in 2015, at a fraction of its current valuation.

Pandion Therapeutics Holdco LLC (PAND)

Finally, the fund participated in Pandion’s Series B round of $80 million. The biotech company went public just months after, at a valuation nearly six times higher than its private funding. Considering that the company is missing from RA’s latest 13f holdings, the hedge fund booked a quick multi-bagger profit in a matter of months.

These are just a glimpse of RA Capital’s multiple successes when it comes to its private allocation of funds.

Final Thoughts

RACapital Management is a special hedge fund. Specializing in a challenging sector to understand by most, the firm has outperformed the overall market by a wide margin with its public investments. And, it has done extremely well when it comes to its private investments. Mr. Kolchinsky and his team are true value-creation experts with deep industry know-how, serving their investors with outstanding, long-term returns.