Five Stock Picks From The Hedge Fund Manager Who Saw The Pandemic Coming

The day the S&P 500 Index reached its all-time high, Sio Capital’s Michael Castor said the following about the coronavirus threat:

“The risk is small but not negligible that coronavirus (COVID-19) will become pandemic. The virus is transmissible during the 14-day incubation period when infected carriers are asymptomatic. This is in contrast to diseases like Ebola, which are contagious only when symptoms are present.

There will be some negative impact on economic activity as China (and other regions to variable degrees) have curtailed business activity, travel, and tourism to prevent the spread of the virus. Interestingly, epidemiologic data suggests that curtailing travel does little to prevent viruses from becoming epidemics.”

Michael Castor is a true hedge fund manager. His net market exposure usually hovers near zero. That means he doesn’t rely on bull markets to generate positive returns, unlike most other “hedge funds." You can observe Castor’s stock picking ability especially during bear markets. When most investors lose money, Castor usually delivers positive returns. For example, Sio Capital returned 10.8% in 2008 when the S&P 500 Index lost 37%. How many hedge fund managers do you know that were able to deliver positive returns in 2008?

More recently, in 2018 when the S&P 500 Index lost 4.4%, Sio Capital delivered a net gain of 23.3%. So, you shouldn’t be surprised to hear that Sio Capital delivered a net return of 7.2% in Q1, versus a 19.6% loss for the S&P 500 Index.

There were only a few investors who saw this coronavirus induced recession and bear market coming. In the video below, we share Michael Castor’s latest views regarding the coronavirus pandemic. He provides his thoughts about the effectiveness of hydroxycholorquine and Gilead Sciences Inc. (GILD)’s remdesivir. He also talks about what we should expect in terms of economic recovery until the end of 2021.

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