The bursting of the biotech stock bubble has been painful for Baker Bros. Advisors, the closely watched healthcare hedge fund with approximately $7 billion under management. The days when "Baker Brothers stocks" went up and up and up appear to be over. Since March, the fund's portfolio holdings have been spanked hard.
Here's a performance chart since March 1 of the largest biotech and drug stocks held by Baker Brothers Advisors, according to its (admittedly dated) 13-F filing of Dec. 31, 2013.
This next chart tracks the largest healthcare stock additions to the Baker Bros. portfolio as of the end of 2013 (again, culled from the dated 13-F filing):
Some perspective is in order, of course. Baker Bros. made a ton of money during the biotech stock bull market so these losses might be mere flesh wounds for the fund. Not so, however, for the unfortunate retail investor whose healthcare investment strategy was to simply, "Buy all the Baker Brothers stocks because they only go up."
That rule no longer works.