Hedge Fund Focus: August 5, 2016
In case you missed them, here are the hot topics in the hedge fund space this week…
Good news came out towards the end of the week – the industry has posted its best returns in 9 months according to HFR, gaining 1.5 percent in July. However, gains weren’t even across strategies. CTAs continued their winning streak; multi-managers, including Blackstone, Citadel and obviously Visium, had a rough Q1; and equity strategies are just scraping by, returning an average of 2 percent a year for the last 3 years.
Managed futures are leading the pack when it comes to flows, they saw a 2.66 percent increase in capital in July. However, event driven strategies experienced comparable outflows. Additionally, according to a new study, institutional assets will only represent a fraction of flows by 2020 as 90 percent of capital by then is expected to come from retail clients.
2018 may be far off to some, but not Steve Cohen. His new hedge fund is already meeting with potential investors to gauge interest in preparation for the firm’s launch in 18 months.
David Einhorn’s Greenlight Capital finally had some good news, gaining 4.8 percent last month, and activist investor Marcato gained 10.4 percent. However, the same can’t be said for Carl Icahn and Bill Ackman, who are both down 18 percent for year, or Och-Ziff, who experienced two blows this week. First, it was revealed the firm has spent $148M on legal costs in relation to a bribery investigation by U.S. authorities and has put aside another $214M to deal with the matter, and second, Goldman added further insult to injury by announcing it would pull another $350M from the firm.
Paul Tudor Jones is enlisting the help of quant capabilities to boost his firm, which has suffered losses and redemptions over the last year and saw both accelerate last quarter. This is a trend being seen across the industry and other managers getting in on the action include Balyasny Asset Management.
Weekly Reads: The Financial Times wrote two interesting stories this week. The first was on how fund evaluation is flawed because without performance benchmarks for asset classes, managers are only evaluated “emotionally” aka on their sales and personal support. The second was on how we could see fund management fees cut to 0 percent in the near future as managers try new strategies to win and retain clients. Additionally, the NYT DealBook did a deep dive into Bill Ackman’s holdings over the last few years to see how they have fared over time.
Quick Things to Know: Emerging markets are picking up as a favorite amongst hedge funds; liquid alternatives lost $7B in Q2 due to volatility; ex-Brevan Howard co-founder Chris Rokos promoted four employees at his new firm to partner; and in the wake of insider trading allegations, Visium is planning to fire 24 traders as it winds down its business.