Affluential Hedge Funds Suffer in September ~ market folly

Friday, October 3, 2008

Affluential Hedge Funds Suffer in September

Oh how the mighty have stumbled. In a market where everyone is feeling the heat, even the well-respected, historical top performers are now finding it rough out there. We recently got some performance updates from numerous iconic hedge funds and found out that September was not kind to them. Let's take a look at some of the information.

  • Moore Capital Management, a group of global macro hedge funds ran by notable risk manager Louis Bacon has seen three of its funds 'stumble' in the recent weeks, coming in -5% in September. You can view Moore Capital's equity portfolio holdings here.
  • Maverick Capital, a $10 billion hedge fund ran by Lee Ainslie was -19.5% in the month of September alone and is now -21.2% year-to-date. As you can see, they were actually holding up pretty well all year until September hit them hard. Oh how one month can change things. Maverick's levered fund was -35.5% for the month of September. You can check out Maverick's most recent portfolio holdings here.
  • Third Point Offshore, a fund ran by notable activist Daniel Loeb's Third Point LLC was -11% for the month of September and is now -18.4% for the year. You can check out some of Third Point's most recent holdings here.
  • Paul Tudor Jones' Raptor Fund (Tudor Investment Corp) was -2% in the month of September and is now -12% year-to-date. Although Tudor employs a global macro strategy, the Raptor Fund is their equities fund. The Raptor Fund is currently run by James Pallotta; but, as I wrote about earlier, Pallotta is leaving Tudor to start his own equities fund. And, you can view Tudor Investment Corp's most recent equity holdings here.
  • Greenlight Capital, the hedge fund run by David Einhorn, was -12.8% in September and is -16.4% for the year. You can check out some of Einhorn's portfolio holdings here.
  • Lone Pine Capital, another 'tiger cub' fund managed by Stephen Mandel saw its Lone Cyprus fund -14.7% in September. That fund is -26.5% for the year. You can check out Lone Pine's recent activity here and portfolio holdings here.
  • Timothy Barakett's Atticus Capital woes continue. His Atticus European Fund was -15.8% percent in September and his Atticus Global Fund -2.8% in September. Atticus European is now -42.5% for the year and Atticus Global is -27.2% for the year. You can view Atticus' most recent SEC filings disclosing their portfolio holdings here.
  • Jeffrey Gendell's Tontine Partners wer -59.30% in September and are now -66.7% for the year... unreal. Here are Tontine's most recent portfolio holdings.
  • Bret Barakett, brother of Atticus' Timothy Barakett, is also feeling the pain. His Tremblant Capital was -19.3% for the month of September and is -28% for the year. You can check out Tremblant's recent activity here and their portfolio holdings here.
  • Shumway Capital's levered fund was -16% for September, and their Ocean fund was -8.6% for the month and is now -9% year-to-date. (Yet another case of one month doing extreme damage to a fund).
  • Chris Coleman's Tiger Global was -14.3% for September and is now -13.7% for the year.
  • Stephen Cohen's SAC Capital Multi-strat fund was -10.7% for September.
  • Farallon Capital Management was -10.5% for the month of September.
  • David Stemerman's Conatus Capital was -10.4% for September and is -8.10% year-to-date. Stemerman recently left Lone Pine Capital (referenced above) to start his own fund, which I wrote about here.
  • Jana Partners was -9% for September and is -14.7% for the year
  • Andreas Halvorsen's Viking Global, who I will be profiling next week, was -7.9% for September and is 0.30% for the year. (Wow, a fund that is actually still UP on the year).
  • Bill Ackman's Pershing Square was 0.10% for the month of September and finds himself 1.9% for the year. (Another fund actually UP on the year).
  • Ken Griffin has been hit hard as well. Citadel Capital's flagship fund was -15% for September and -18% for the year. The fund has lost around $2 billion.

So, don't feel so bad if your portfolio is underwater because even those regarded as 'some of the best in the game' are finding this market troublesome. No one is invincible in this environment.

Well, almost no one. John Paulson certainly could argue that he is invincible. Paulson runs Paulson & Co and is famous for making a fortune by betting against sub-prime when this whole mess began to unfold. And, it appears as if Paulson is still up to his fortune-making ways. One of his funds has generated a 589% return, which could easily be up there amongst the largest returns by a single hedge fund in a year. Paulson's Advantage Plus fund has returned 19.44% year-to-date as of the end of August. This is the same fund that gained 158% the year prior and has grown to almost $9 billion. And, that's not all. Paulson has multiple funds performing well in this environment. Taken from DealJournal,

"Paulson’s Advantage fund was up 13.22% for the year to the end of August, having made 100.15% last year. Its Credit Opportunities fund was up 12.95%, having made 351.72% last year; its Credit Opportunities fund was up 12.46%, having made 589.62% last year; its Enhanced fund was up 8.17%, having made 116.48% last year; and its International fund was up 5.17%, having made 51.7% last year. Paulson turned a $500m investment in its Credit Opportunities fund into $3.5bn over the course of last year, considered by investment consultants and investors the largest dollar amount ever generated by a hedge fund in a year."

After making a fortune by betting against sub-prime, Paulson has turned his focus to shorting UK banks. Paulson is on quite a roll and we'll keep an eye on his performance over the next year and see if he can hit a home run three years running.

Overall though, this has been the worst year for hedge funds in quite some time. As evidenced above, even some of the historically brightest managers in the game are stumbling a bit. And, undoubtedly, such struggles will lead to investor redemptions and continued deleveraging.

For more information and background on some of the iconic hedge funds mentioned above, head over to my posts on hedge fund manager interviews and Alpha's hedge fund rankings.

Sources: Anonymous investors in various funds, NYT , Bloomberg, FT, & WSJ DealJournal

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