A once red-hot health care hedge fund is shutting down.
8 Knots Management told investors it is returning 95 percent of its capital by the end of March, according to a letter sent to clients, parts of it read to Institutional Investor. The firm said it is no longer happy with the way it is reacting to stock moves.
This is somewhat of a surprise, given that the hedge fund has compounded at a 17 percent annual clip since its 2019 launch.
In 2025, it fell 6.5 percent — its second annual loss — in an explosive year for hedge funds specializing in fledgling pharma stocks. This year, 8 Knots rose 1 percent in January but was down by double digits in February, according to an investor who saw the letter.
“They don’t think their strategy will work in the future,” explains the investor, noting that he admires the firm for shutting down if this is how they feel.
The letter said the firm currently manages $1 billion. It managed $1.8 billion in discretionary assets at the end of 2024, according to its June 2025 ADV filing.
Scott Green founded 8 Knots in 2019 after eight years at OrbiMed, including as a partner. Before that, he had stints at Bank of America Merrill Lynch and Bear Stearns Asset Management. Green earned an undergraduate degree in economics from Brandeis University, where he made the men’s basketball team as a walk-on in his junior year and was named team captain as a senior.
In his LinkedIn profile, Green stresses that 8 Knots deploys a market-neutral strategy that aims to generate positive returns in both up and down markets. Many of its holdings are larger, well-established companies — unlike those of many life sciences firms that specialize in fledgling drug and medical products companies.
It is not unusual for 8 Knots to shake up its top holdings, fully liquidating and initiating large positions every quarter. It has sometimes made significant trades in and out of a stock from quarter to quarter.
For example, Cardinal Health was its fifth-largest long at the end of the second quarter, but 8 Knots fully liquidated the position in the third quarter. In the fourth quarter, it got back into the stock, making it the firm’s ninth-largest long.
At year-end, 8 Knots’ three largest longs in the $800 million U.S. stock portfolio accounted for nearly two-thirds of assets. Two of the stocks have suffered sharp losses in recent months.
Managed care company Molina Healthcare, which became the No. 1 long after the firm initiated its position in the fourth quarter, was down 11 percent over the first two months of the year. The stock has declined more than 30 percent since its peak in late January.
Health insurance company Elevance Health, 8 Knots’ third-largest long at year-end, is down more than 17 percent since the beginning of the year. The hedge fund nearly tripled its position in the fourth quarter.
Centene, which manages government-sponsored health insurance programs, has lost nearly half its value since July 1. But 8 Knots initiated its large position in the third quarter, so it probably bought the shares at a fairly low price.
