Hedge Fund Focus: September 30, 2016
In case you missed them, here are the hot topics in the hedge fund space this week…
There has been swirl for years about how the industry as we know it is going to drastically change, but this week with Julian Robertson saying the industry is about to face its most difficult time ever and three big developments rocking the industry, this change may be closer than anyone expected. These major developments included:
- First and somewhat surprisingly, Perry Capital announcing it would close its doors amid heavy redemption requests due to performance losses over the last 18 months. One of the original and once largest hedge fund players, Perry Capital has seen its AUM halved in recent years. The firm also suffered double-digit losses last year. It will wind down quickly, returning majority of client capital by October and selling more illiquid assets over a longer-period.
- Secondly, Och-Ziff, who we definitely thought was gearing up to fight to the bitter end, agreeing to pay the U.S. government $413M to settle an investigation into whether the firm bribed African officials to secure natural resources deals and investments. It is alleged the firm paid more than $100M in bribes. As part of the settlement, the firm did plead guilty to one count of conspiracy and Dan Och also paid a $2.2M fine for record keeping violations.
- Finally, Brevan Howard, who has suffered a series of blows over the last 18 months, announcing it will change its fees structure. The luminary manager will charge a 0 percent management fee on all new flows into its flagship fund. The change is due to heavy redemption requests and performance losses.
Compounding the issues that emerged this week, Absolute Return released its semi-annual Billion Dollar Club ranking on Thursday, reinforcing many other findings that industry assets are declining. In total, managers with $1B or more in assets lost nearly 2 percent of their AUM in the last 6 months and nearly 7 percent in the last year, with 55 percent of managers on the list losing money.
In the wake of everything going down with Brevan Howard, former BH PM Chris Rokos has to be happy he got out when he did, especially since his new firm Rokos Capital has eclipsed BH, outperforming them by about 8 percent this year. However, Lansdowne is not having the same experience. It has lost big on its Glencore bet and as a result its flagship fund, which has had stellar performance the last few years, is down about 13.2 percent YTD.
In strategy news, despite recent lackluster performance, CTAs are still in favor, stealing money away from long/short strategies and macro strategies continue to suffer, losing $3.4B in capital last month.
Quick Things to Know: Tudor is closing its Singapore trading desk as part of the firm’s global shake up, which included cutting 15 percent of its workforce last month; Fortress is shuttering its event-driven fund; and Lyxor’s hedge fund index is up 0.4 percent for the first three weeks of September.