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QVT Financial’s Investments, Performance, Letters

Daniel Gold, who holds a Bachelor of Arts degree in Physics from Harvard College, founded QVT Financial in 2004 after having worked for several years as a star trader at Deutsche Bank. QVT started inside Deutsche Bank and over the years its team has developed several fundamental and quantitatively-oriented strategies, which use the fund’s own, internally-developed software.

QVT is a highly-diversified fund with offices in the US, Europe and India, which invests in a variety of securities, including debt, and over the years has been involved in a number of companies, some of which it took to court. For example, in 2009, QVT led a group of bondholders to explore their options regarding the delayed debt payments of Nakheel, a real estate company owned by Dubai World. In 2007, QVT joined six other hedge funds to urge Refco Inc. to increase its payments to stockholders during its bankruptcy proceedings. In 2008, it accused the Italian bank UniCredit of disregarding shareholder rights in the takeover of Kazakh bank ATF, of which QVT held around 10% preference shares, which were tendered at a lower price than ordinary shares. Earlier this year, QVT Financial has opened a bankruptcy court trial against Lehman Brothers Holdings Inc. to collect a $265 million claim over its credit default swap transactions with Lehman.

In this way, Dan Gold’s fund was involved in a lot of restructurings in various companies over the years. QVT even had a relationship with Turkish football (it’s football, not soccer). QVT was the largest minor shareholder of Galatasaray Sportif, the listed merchandising of the renown Turkish football club, Galatasaray, and in 2010 it appealed to the country’s financial markets watchdog, the Capital Markets Board, to intervene in the merger between Sportif and the club itself, accusing it of using a tender offer for Sportiff to avoid repaying around $223 million in loans that the subsidiary offered to the parent company. QVT also sued the CMB, claiming that it failed to protect shareholders in the merger after the authority allowed the merger to go through. The fund held almost 18% of Sportif and said that the proposed merger at around $101 per share undervalued the company by as much as 75%. Nevertheless, Gold said that QVT’s position in Sportif, which it had held since 2005 generated a profit even at the proposed tender price.

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Aside from suing companies and getting involved in restructurings, QVT Financial has also been involved in the creation of several companies, the most well-known of which are Axovant and Myovant. In 2014, Vivek Ramaswamy, a partner at QVT Financial, launched Roivant Sciences, a holding company that in-licenses late-stage drug candidates and uses its subsidiaries to develop them. QVT Financial, where Ramaswamy was responsible of managing the biotech portfolio, backed Roivant, which later went on to launch several other companies, the largest of which are Axovant Sciences Ltd (NYSE:AXON) and Myovant Sciences Ltd (NYSE:MYOV). Axovant and Myovant are currently QVT’s largest holdings, according to its latest 13F filing, although it owns the shares indirectly through Roivant.

Daniel Gold

QVT Financial is one of approximately 650 hedge funds that we track at Insider Monkey as part of our investment strategy (see more details). Moreover, it is one of the most successful funds we track. According to our calculations, which take into account the fund’s investments in companies worth over $1.0 billion disclosed in its 13F filings, QVT Financial was the top performing hedge fund in our database with a return of 38.1% during the first quarter. The fund also returned 17.5% in the first quarter and was 62.2% in the green in the first six months of 2017. This shows that QVT Financial is a fund whose investments are worth following and even imitating in order to generate market-beating returns. On our website, you can track QVT’s real-time filings with the Securities and Exchange Commission, in which the fund reveals a new position, or reports changes to an existing holding and other developments, as well as you can see the fund’s equity portfolio as soon as it files its quarterly 13F filings. To do that, you should sign up on Insider Monkey and add QVT to your follow list.

In its latest 13F filing, Dan Gold’s fund disclosed an equity portfolio worth $3.75 billion as of the end of June, up from $3.22 billion a quarter earlier. The portfolio was mainly invested in the healthcare sector, which amassed over 80%, mainly due to two large positions in Axovant and Myovant. On the next pages, we are going to take a closer look at some of QVT Financial’s top holdings heading into the third quarter.

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