Mark Melin, a hedge fund consultant, acknowledged Glenview has been an extraordinary performer over the years. But Melin said he has been concerned about the manager’s insufficient hedging. “Now we’re seeing the cost of an inadequate short book,” Melin said.
The sudden, sharp health-care sector decline, according to Robbins, has largely been driven by short-term sentiment, not fundamentals. "Our history has shown that swift drawdowns have proven to be significant buying opportunities over time,” said Robbins, who believes that the health-care cycle has a lot more room to run. If he’s right, fee-free performance could be a boon for investors.
However, managing the new fund without short protection exposes investors to industry and market uncertainties, which in no time could cost investors far more than the fees they are saving.