Woodline Partners, founded in 2018 by three former Citadel portfolio managers, has quietly amassed nearly $8.5 billion in assets under management, making it one of the largest recently launched hedge fund firms. The equity-driven fund boasts an impressive track record, achieving annual gains between 10.2% and 14.4% in its first four years and maintaining profitability every quarter since inception.
This consistent performance is particularly noteworthy given the market volatility of recent years. Woodline Partners not only avoided annual losses but also remained profitable in all five quarters when the S&P 500 declined. Even during the 2022 market downturn, when the S&P 500 lost 19%, Woodline delivered a 10.4% return. This success contrasts sharply with the performance of many technology-driven hedge funds, which struggled during the same period.
A Deep Dive into Woodline’s Strategy
Led by Mike Rockefeller, Karl Kroeker, and Matthew Hooker, all Citadel Global Equities alumni, Woodline Partners employs a traditional long-short strategy with a net long exposure generally around zero. The firm operates a specialized subsector structure, dividing its investment efforts across approximately 25 individual teams, each managing around 50 stocks.
While initially concentrated in tech and healthcare, these sectors still represent roughly two-thirds of Woodline’s capital allocation. Over time, the firm has diversified into consumer, energy, financials, and industrials. Within healthcare, teams specialize in life sciences tools and diagnostics, medical devices, pharmaceuticals and biotech, services, and animal health. Tech teams cover areas like cable, media, and telecom; hardware and communications; industrial technology; internet and gaming; semiconductors and components; semiconductor test equipment; and software.
Portfolio Composition and Risk Management
As of June 2023, Woodline’s U.S. portfolio held 545 different stocks valued at over $10 billion, according to its 13F filing. The top ten positions constituted just over 14% of total assets, with Eli Lilly and Regeneron Pharmaceuticals leading as the largest long positions, followed by Ovintiv.
Woodline’s returns are generated primarily from its long portfolio, while short positions are strategically used to hedge market risk. Notably, the firm’s healthcare teams have consistently delivered profits, even when other specialized healthcare and biopharma hedge funds experienced significant losses. This underscores Woodline Partner’s ability to navigate challenging market conditions and generate consistent returns for its investors. In addition to its flagship fund, Woodline is also developing Woodline Spire, a long-only fund benchmarked to the S&P 500. This move signals the firm’s intention to expand its investment offerings and cater to a broader range of investor needs.
