Highland Premium Long/Short Healthcare Fund announces plans launch

By Toni Weeks

San Diego, Dec. 23 - Highland Capital Management, LP has completed the initial registration of shares of a planned new fund that will invest in health care companies, according to an N-2 filing with the Securities and Exchange Commission.

The Highland Premium Long/Short Healthcare Fund will seek long-term capital appreciation and will, under normal market conditions, invest primarily in a portfolio of long and short securities of health care companies of varying market capitalizations. It also intends to write and purchase call and put options on health care indexes and, to a lesser extent, on the fund's portfolio securities on a month-to-month basis. In determining the level of call and put options to be written and purchased, the subadviser will use the then-current level of the CBOE Volatility Index as a guide.

The fund intends to invest at least 80% of its net assets, plus any borrowings for investment purposes, in securities of companies principally engaged in the design, development, production, sale, management or distribution of products, services or facilities used for or in connection with health care or medicine. This could include, among others, pharmaceutical firms, medical supply companies, businesses that operate hospitals or health care facilities and companies engaged in health-care related research.

The fund may invest up to 50% of the value of its total assets in securities of non-U.S. issuers, which may include emerging market issuers.

The portfolio manager will be Micheal D. Gregory, who joined Cummings Bay Capital Management, LP, the fund's subadviser, in 2010. Prior to that, he spent four years as chief executive officer and portfolio manager at Cummings Bay Capital Management LLC, which he founded in 2006 and where he managed a long/short health care equity hedge fund. Gregory also held positions at Sands Point Capital Management LLC and Iroquois Capital Management LLC.

The fund registered 50,000 shares at a price of $20 apiece for a total offering of $1 million. Underwriters have been granted an over-allotment option. The minimum initial investment is 100 shares, or $2,000.

The sales charge and fees have not yet been determined.

The fund's investment adviser will be Dallas-based Highland Funds Asset Management, LP.

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