Hedge Fund Focus: December 2, 2016
In case you missed them, here are the hot topics in the hedge fund space this week…
Steve Cohen may have finally overcome the last hurdle relating to SAC’s insider trading problems. This week Cohen and his now defunct hedge fund agreed to pay $135M to a group of investors in the pharmaceutical company Elan, now part of Perrigo, involved in the insider trading situation.
Event-driven strategies have lost $38B in redemption request this year, the largest losses suffered by any one strategy YTD, and not surprisingly, new research has found that these liquidations hurt managers’ returns.
As for individual investors, a third of managers are doing quite well and are actually up over 15 percent YTD, including Renaissance Technologies. Additionally, Einhorn’s Greenlight Capital is up over 7 percent YTD and Barry Rosenstein's Jana Partners gained 2.2 percent in November, bringing it back into the black for the year. However, Crispin Odey cannot say the same thing, as two of his funds are down over 40 percent YTD.
Paulson & Co. suffered two high-profile partner departures this week as it begins to wind down and become a private shop, and Brevan Howard has offered investors in its publicly listed fund the option to exit through a share buy-back due to lackluster performance.
A new survey by Fidelity found that 71 percent of institutional investors plan to increase their allocations to alternatives, including hedge funds, over the next two years. However EY contradicted Fidelity, finding that 48 percent of investors plan to move away from hedge funds into other alternative investments over the next five years.
Weekly Reads: The Financial Times wrote an interesting piece at the onset of the week about how top-rated actively managed accounts are under-performing, finding that the net-of-fees majority have under-performed their benchmarks since 2008. The outlet explored the findings further in another interesting piece that questioned whether asset management companies are too profitable.
In the activist arena, Elliott has proven more successful the second time around in its newest attack on Samsung. Currently, the tech conglomerate is considering splitting up the company due to pressure from investors to raise dividends which stem from Elliott’s renewed attack. As for the sector as a whole, activism, which lagged this year, is expected to be renewed in 2017.