Kris Jenner, the former top stock picker at T. Rowe Price Group Inc., has raised more than $100 million for a hedge fund to invest in health-care and biotechnology stocks, according to a person with knowledge of his plans.
Jenner will start the fund, named Rock Springs Capital and based in Baltimore, later this year and is continuing to seek commitments from investors, said the person, who asked not to be named because the information isn’t public. Jenner will run the fund with Mark Bussard and Graham McPhail, former T. Rowe Price analysts who left with Jenner in February, the person said. Jenner declined to comment on the fund.
Jenner, 51, had run T. Rowe Price’s $5.8 billion Health Sciences Fund (PRHSX:US) since 2000 and beat 83 percent of peers in the five years before he left, according to data compiled by Bloomberg. The fund was T. Rowe Price’s best performer during that period, returning an annual average 13 percent.
“What’s distinctive about Kris Jenner is not just his medical and scientific background, but also his ability to connect the dots and see how different information is related,” Leonard Bell, chief executive officer of Cheshire, Connecticut- based Alexion Pharmaceuticals Inc. (ALXN:US), said in an interview.
Jenner held Alexion shares (ALXN:US) for more than a decade. T. Rowe Price was Alexion’s second-biggest shareholder with a 9.5 percent stake as of Dec. 31, according to regulatory filings.
Jenner earned a medical degree from Johns Hopkins University School of Medicine in Baltimore, then a Ph.D. in molecular biology from Oxford University in England. He graduated summa cum laude from the University of Illinois at Urbana-Champaign, where he was a backup quarterback on the school’s football team.
He joined T. Rowe in 1997 and took over the Health Sciences Fund in 2000. He has a reputation for finding lesser-known pharmaceutical and biotechnology firms developing innovative therapies, Christopher Davis, an analyst at Chicago-based fund research firm Morningstar Inc. (MORN:US), said in an interview after Jenner’s departure from Baltimore-based T. Rowe Price.
Jenner’s is raising money following a period of strong returns for the health-care industry, according to Andrew Berens, a senior biotechnology analyst at Bloomberg Industries in Skillman, New Jersey. U.S. health-care stocks, as measured by the Standard & Poor’s 500 Health Care Index, have gained 36 percent since the end of 2011, compared with a 26 percent increase in the Standard & Poor’s 500 Index.
“Health care is the hottest new launch sector we see,” Omeed Malik, head of the emerging-managers program that advises fund start-ups at Bank of America Corp.’s Merrill Lynch in New York, said in an interview.
Rock Springs Capital will have significantly the same investing strategy as his former fund at T. Rowe Price, the person said. Moving to a hedge-fund strategy will give Jenner the ability not only to invest in companies he believes will rise in value, but also to bet against companies he believes will fall, a practice known as short selling. Most mutual funds aren’t allowed to short stocks.
Hedge funds typically charge clients about 2 percent of assets annually and 20 percent of profits. Jenner’s former mutual fund charges shareholders 0.84 percent annually, according to data compiled by Bloomberg.
T. Rowe appointed Taymour Tamaddon, formerly an analyst at the firm, to replace Jenner as manager of the Health Sciences Fund.
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