Hedge Fund Focus: October 14, 2016
In case you missed them, here are the hot topics in the hedge fund space this week…
More figures rolled in this week, confirming September was a good month for the industry:
- eVestment had managers up on average 0.73 percent
- HedgeFundIntelligence’s index rose slightly, up 0.33 percent
- EurekaHedge had funds up 0.5 percent with 63 percent of funds in the index in the black
- MSCI World’s index was up 0.19 percent
Equity and event driven strategies drove September gains and merger arbitrage strategies as well as distressed funds also had a good month. Additionally, the first week in October proved fruitful for global macro managers, who gained 2.1 percent on average. However, they are still down 4.8 percent YTD. Unfortunately, CTAs, who started the year off with a bang, are losing ground. They were down 1.2 percent last month, but are still in the black for the year and continue to lead the pack.
The positive index and strategy performance has spilled over to several of the industry’s luminary managers:
- Renaissance Technologies, who went through an uneven spell in recent years, has posted double-digit, mid-teen returns for the year and as a result has attracted $7B in new investments
- Citadel has made one of the strongest comebacks this year after nearly double-digit losses in March. The firm brought in around 2 percent last month in multiple funds and was up 7.3 percent for Q3
- Millennium Partners has also pulled itself out of the red after suffering its third worst month ever in February, posting gains of around 1 percent for both August and September
- And though not as strong as previous years, D.E. Shaw is up nearly 6 percent YTD, which is much better than some of its peers can say
Unfortunately, despite the continued gains, early losses this year are still impacting the industry as flows have declined 1.5 percent thus far in October and the Tiger Cubs are not having quite the same experience as other managers. The Julian Robertson alumni, who took major performance hits in the first half of the year, are still struggling to regain ground despite making major strides in chipping away at the year’s earlier losses.
Amid mediocre performance, fee and transparency criticism, and heavy outflows, the New York state pension fund has told managers they must return 10 percent annually or hit the road. In the current global low-rate, low-return environment, this seems like an unrealistic, tall order.
In the wake of the SEC hitting Leon Cooperman and his firm with insider trading charges, the hedge fund titan took to the offensive this week. First, he released a statement saying the charges have drastically impacted his firm’s and his 43 partner’s ability to grow and then he hit the broadcast circuit, telling CNBC that he could have settled the case but choose to fight it instead and revealing to Bloomberg TV that the firm has already lost $4B in AUM as a result of the charges. Additionally, according to those in the know, the SEC is seeking suspension of Cooperman from the industry as part of its resolution.
Quick Things to Know: S. hedge funds manage 72 percent of the industry’s global AUM; Steve Cohen is upping bonuses for traders but only if they outperform the markets (attempt to attract talent in the wake of reputation hits?); and Perry Capital will cut nearly half its staff by year end as it unwinds.