The Challenging Return of Jacob Gotlieb

Jacob Gotlieb, the founder of Visium hedge fund that was shut down on the basis of insider-trading might be planning to raise funds from clients once more. The decision to rejoin the hedge fund business is not yet final for Mr. Gotlieb but he has made strong hints about his return. Some of the reasons that led to the closure of his previous firm Visium include mismarking and insider trading and also inflation of bond portfolios and assets.

According to Mr. Gotlieb, he has always been passionate about investing since he was a teenager and he plans to keep doing it for life. His new firm, Altium capital mainly focuses on managing his own wealth and already has 6 employees including his brother Mark Gotlieb who is the chief operating officer.

Gotlieb believes that there is a need for new hedge funds focused on health care. According to him, the large number of companies that have gone public means that there will be greater value creation and destruction. Just like Visium, the new fund is expected to have a focus on thoughtful and methodical research.

At the peak of its operation, Visium was approximated to manage funs worth $8 billion. One of Visiums flagship healthcare funds known as the Visium balanced fund returned 14.3% annually in between April 2001 and 2015. Within this profitable period, Mr. Gotlieb was responsible for managing the strategy in several accounts between 2001 and 2005.

In 2016, a Visium Portfolio manager, Sanjay Valvani was charged by prosecutors for using confidential government information concerning generic drug approvals. Mr. Valvani however committed suicide. In a separate case, Mr. Lumiere, a former portfolio manager at Visium was sentenced to 18 months in prison for mismarking securities in a fixed income fund. Christopher Plaford who happens to also be a portfolio manager pleaded guilty for mismarking of securities. He has not yet been sentenced.

The SEC also banned Visium’s Chief financial officer, Mr. Ku from the industry for a year for failing to supervise his portfolio managers.