Farallon Slashed $2.5B in Credit Hedges and Built a $6.8B Biotech Empire While Dumping Bitcoin: Inside the Q4 2025 Pivot

Farallon Capital Management cut $2.5 billion in credit hedges in a single quarter. The $42 billion multi-strategy fund founded by Tom Steyer slashed its iShares High Yield Bond ETF (HYG) put position by 80% — from $3.17 billion to $645 million — while simultaneously building a $6.8 billion biotech and healthcare empire that now dominates nearly a third of its 13F portfolio. And in what may be the most telling signal: Farallon dumped 77% of its Bitcoin ETF position and 86% of its Ethereum exposure.

TL;DR: Farallon’s Q4 2025 Filing at a Glance

• 13F AUM: $21.19B (down from $24.43B in Q3 — -13.3%)
• Total Fund AUM: $42B (including non-13F assets)
• Holdings: 150 positions across equities, puts, and options
• HYG Put Slash: $3.17B → $645M (-80%) — largest single move in the portfolio
• Biotech Sleeve: ~$6.8B across 30+ healthcare/biotech names (32% of portfolio)
• #1 Biotech: Revolution Medicines (RVMD) at $1.16B (+70% QoQ)
• Bitcoin Exit: IBIT cut from $455M to $106M (-77%); ETHA cut -86%
• New Positions: CyberArk (CYBR) $470M, Synopsys (SNPS) $469M, Broadcom (AVGO) $309M
• Leadership: Nicolas Giauque became Managing Partner in 2025, replacing Andrew Spokes

The $2.5 Billion Credit De-Hedge

The single largest move in Farallon’s Q4 portfolio wasn’t a stock purchase — it was unwinding a massive credit hedge. In Q3, the fund held $3.17 billion in HYG put options (13% of the portfolio), essentially a bet that high-yield corporate bonds would decline. By Q4, that position was $645 million (3%). The fund also cut its RSP (S&P 500 Equal Weight) puts from $968 million to $690 million.

This de-hedging tells a clear story: under new Managing Partner Nicolas Giauque, Farallon is shifting from defensive positioning to offensive conviction. Reducing credit protection while building long biotech positions is a bet that the macro environment is benign enough to justify concentrated risk.

The Biotech Conviction Empire

Farallon’s healthcare and biotech sleeve is staggering in scope. The fund holds over $6.8 billion across 30+ names, with several positions showing dramatic Q4 increases:

Stock	Q4 Value	QoQ Change	Thesis
Revolution Medicines (RVMD)	$1,162M	+70%	RAS-targeting oncology leader
Natera (NTRA)	$897M	+31%	Cell-free DNA diagnostics
Boston Scientific (BSX)	$709M	+53%	Medtech devices, +57% shares added
Exelixis (EXEL)	$689M	-15%	Cancer therapeutics, trimmed but still large
BridgeBio Pharma (BBIO)	$688M	+62%	Rare disease pipeline
Protagonist Therapeutics (PTGX)	$537M	+30%	Peptide-based therapies
UnitedHealth (UNH)	$528M	-19%	Managed care anchor
Lantheus (LNTH)	$361M	+103%	Radiopharmaceutical diagnostics, doubled
Crinetics (CRNX)	$323M	+34%	Endocrinology
Liquidia (LQDA)	$299M	+53%	Pulmonary arterial hypertension
BEAM Therapeutics (BEAM)	$279M	+14%	Base editing gene therapy

The biotech thesis isn’t a shotgun approach. Farallon is clustered around precision medicine (RVMD’s RAS inhibitors, BBIO’s rare disease), diagnostic platforms (NTRA’s cell-free DNA, LNTH’s radiopharmaceuticals), and next-generation therapeutics (BEAM’s gene editing). These are pipeline-stage companies with catalysts — exactly the kind of event-driven investing Farallon pioneered.

The Crypto Retreat

Farallon’s crypto positioning shifted dramatically in Q4. The fund sold 69% of its iShares Bitcoin Trust (IBIT) shares, reducing the position from $455 million to $106 million. Its Ethereum ETF (ETHA) was cut even more aggressively — from $235 million to just $33 million (-86%). Meanwhile, the fund opened a new $199 million position in Bitwise 10 Crypto Index (BITW), suggesting a pivot from direct crypto exposure to diversified index-style crypto allocation.

The net effect is a reduction from ~$740 million in crypto to ~$340 million — more than halved. In a quarter where Bitcoin hit new highs, this is a profit-taking move that signals Farallon views crypto as a trade, not a strategic allocation.

New Tech and Enterprise Positions

While biotech dominated the new builds, Farallon also opened significant positions in enterprise technology and infrastructure:

• CyberArk (CYBR): $470M new position — identity security, benefiting from zero-trust adoption
• Synopsys (SNPS): $469M new position — semiconductor EDA tools, AI chip design enabler
• Broadcom (AVGO): $309M new position — custom AI chips (XPUs) for hyperscalers
• KKR & Co (KKR): $257M new position — alternative asset management

The CyberArk and Synopsys additions are notable because they’re software picks with semiconductor connections — CyberArk secures the infrastructure that chips run on, while Synopsys provides the tools to design them.

What Was Sold

The exits reveal what Farallon no longer believes in:

• Hims & Hers (HIMS): $610M → $110M (-82%) — telehealth growth thesis expired
• Autodesk (ADSK): Fully exited — design software, possibly on valuation concerns
• Intuit (INTU): Fully exited — tax/accounting software
• TransUnion (TRU): $397M → $58M (-85%) — credit bureau position collapsed
• Thermo Fisher (TMO): $610M → $368M (-40%) — life sciences tools trimmed
• Salesforce (CRM): $584M → $334M (-43%) — CRM reduced materially

Frequently Asked Questions

Why did Farallon cut its HYG put position by 80%?

The $2.5B reduction in high-yield credit hedges signals increased risk appetite. Under new Managing Partner Nicolas Giauque, Farallon is betting that credit markets remain stable enough to justify shifting capital from hedges to concentrated long positions in biotech and tech.

What is Farallon’s biotech thesis?

Farallon’s biotech positions cluster around precision medicine (RVMD, BBIO), diagnostic platforms (NTRA, LNTH), and gene therapy (BEAM). These are event-driven catalysts — FDA approvals, clinical data readouts — that align with Farallon’s 40-year specialization in event-driven investing.

Why is Farallon selling Bitcoin?

With Bitcoin near all-time highs, Farallon reduced IBIT by 77% and ETHA by 86% — classic profit-taking. The new BITW position ($199M) suggests they prefer diversified crypto exposure over concentrated Bitcoin/Ethereum bets, treating crypto as a tactical trade rather than strategic allocation.

Who runs Farallon now?

Nicolas Giauque became Managing Partner and CIO in 2025, replacing Andrew Spokes (who replaced founder Tom Steyer in 2012). Giauque has been at Farallon since the early days and represents continuity of the firm’s event-driven DNA.

How does Farallon’s 13F compare to its total fund?

Farallon’s 13F shows $21.19B in US equities, but the firm manages $42B total across credit, real estate, international, and private investments. The 13F represents roughly half the firm’s capital — the biotech and tech positions are the public equity expression of a broader multi-strategy approach.