2009 Hedge Fund Rankings: Top 10 Asset Losers

After covering Alpha's 2009 hedge fund rankings, we thought it would also be prudent to cover the firms who suffered the most in 2009. The top of Alpha's list is full of cream-of-the-crop hedge funds with a boatload of assets under management. Hidden in their annual rankings are also a few hedge funds that while still ranked, they truly had a bad year in terms of amassing AUM. In fact, they didn't amass assets, but rather lost them seemingly with ease. Listed below are the hedge funds that suffered the biggest year over year decrease in capital.

1. Harbinger Capital Partners: Assets -60.8% year over year

2. Atticus Capital: Assets -60% year over year

3. Marshall Wace: Assets -56% year over year

4. GLG Partners: Assets -51.9% year over year

5. Gartmore Investment Management: Assets -51.4% year over year

6. Glenview Capital Management: Assets -50.5% year over year

7. Cantillon Capital Management: Assets -46.8% year over year

8. Citadel Investment Group: Assets -46.4% year over year

9. AllianceBernstein: Assets -46% year over year

10. BlackRock: Assets -45.5% year over year


Now, keep in mind that these decreases in assets could be any combination of poor performance, redemptions, and other circumstances. Barely escaping this list were Thomas Steyer's Farallon Capital Management and Jim Simons' Renaissance Technologies. Farallon saw a 44.4% decrease in assets year over year while Renaissance saw a 39.9% decrease YoY. Interestingly enough, even with such large year over year decreases, they are still both tied for 10th place in the hedge fund rankings, clinging desperately to their coveted place in the top 10.

Philip Falcone's Harbinger Capital Partners and Timothy Barakett's Atticus Capital definitely experienced some of the most severe drops in terms of their ranking from 2008 to 2009. Atticus dropped from being 13th last year to 51st this year. Harbinger, on the other hand, dropped from 16th last year down to 57th this year. While all the funds listed about definitely slipped in the rankings, these two funds saw arguably the most meaningful moves.

Philip Falcone's Harbinger Capital Partners

Curiously enough, Harbinger Capital Partners has been absurdly busy with SEC filings and portfolio re-shuffling. And, this very slippage in assets under management is undoubtedly one of the major sources of the problem. As we've detailed very recently, Harbinger has been decreasing their Cliffs Natural Resources (CLF) position, selling off some of their Calpine (CPN), and is seeing bidders for their NYT stake, among many other portfolio moves. When you run a portfolio concentrated with some big stakes, you're bound to experience volatility. And, couple that with 2008 being the most volatile year in a while and you see just where Harbinger is hurting. When they began selling some of their CLF stake, they issued a statement that they were merely bringing portfolio metrics back in line. With all of the volatility they've experienced, their portfolio has undoubtedly been thrown out of whack. Harbinger's Offshore fund finished -22.7% for 2008. They were up 0.95% for January 2009, 4.64% for February, and +0.74% for March, leaving them at +4.06% year to date as of then. And, we also got word that Falcone would be returning to his roots in terms of investing style and would be opening a new fund. You can view Harbinger's portfolio here.

Timothy Barakett's Atticus Capital

Atticus has had their fair share of scares as well. Way back when the market turmoil started to heat up around September 2008, Atticus' Global fund and European funds were down anywhere from 30-to-40% at certain times. And, as such, they were subject to flying liquidation rumors. However, they did not liquidate and are still very much alive today. We detailed their panic as we saw their portfolio holdings drop massively in terms of assets reported to the SEC. Their portfolio deleveraged from multiple-billions of dollars down to around $500 million. Then, from Q3 of 2008 to Q4 of 2008, Atticus' reported assets (long positions) rose up from $500 million back up to $1.9 billion in Q4. So, they essentially took off a lot of positions and moved to cash to stop the bleeding and to meet any redemptions.

After dealing with their crisis and stabilizing their boat, they began to put money back to work last quarter. Interestingly enough, they mainly moved into Call options on some of the very positions they held common stock in previous to their debacle. (We detailed the portfolio changes in their entirety here). So, after being down as much as 30-40% in 2008, Atticus was hoping for a better start to 2009. In terms of recent performance, we've seen that their European fund was -0.8% for February and sat -10% for 2009 at the end of that month, as noted in our series of January & February hedge fund performance numbers (March numbers here). So, while they have seemingly crawled back from the grave, they are not yet out of the hedge fund graveyard. As always, we'll continue to monitor their situation and recently detailed their sales of some Legend International (LGDI).

Ken Griffin's Citadel Investment Group

Lastly, touching on Ken Griffin's firm, we see that while he slipped in the rankings, he is still within striking distance. His firm fell from 13th in 2008 down to 33rd this year as their assets dropped over 46% year over year. Much of this can be attributed to his flagship funds' poor performance (Kensington and Wellington). In 2008, those funds were down around 55% for the year. Things got so bad that they had to halt redemptions and then subsequently sent out this investor letter regarding their situation. Yet, Griffin seems to have turned Citadel's fortunes around as they were up 5% for January, and up another 2.6% for February (as per our performance numbers list). And, most recently, Kensington & Wellington were +3% in March, bringing them to +11% year to date as of then. And, since those flagship funds won't be seeing performance fees for a while due to poor performance, Citadel has started new hedge funds in an effort to boost their revenues and get a fresh start.

Even through all the trauma, both Ken Griffin and Philip Falcone still find themselves on Forbes' billionaire list. And, for all of the funds listed above, 2008 was a year to forget. While some have started off 2009 on a much better foot, there is still a long way to go.

You can view the performance numbers of various hedge funds in our 2008 performance numbers list, as well as their recent performance in our March performance list. Make sure to also check out the 2009 hedge fund rankings.

Alpha's Hedge Fund Rankings 2009

Alpha is out with their annual hedge fund rankings and they've compiled a list of the top 100 hedge funds by assets and the combined hedge funds on the list totaled $1.03 trillion in assets. Ray Dalio's Bridgewater Associates is the top of the pack with $38.6 billion under management. In 2008, they were the #2 fund on the list and they have since passed JP Morgan to garner the top spot. (JP Morgan notably lost ground due to sluggish performance & redemptions at their Highbridge Capital unit). Although we haven't covered Bridgewater's portfolio, we've covered some of Ray's market thoughts previously. Their Pure Alpha fund finished up 8.7% for 2008. Previously, we've also covered Alpha's 2008 rankings in depth if you wish to compare years.

For this year's rankings, they slightly changed the way they indexed their rankings by using firm and fund assets from January 1st, rather than the December 31st data they had previously used. In order to qualify for the top 100 hedge funds in the world, a firm needed at least $4 billion to be considered. In 2008, this threshold was around $6.25 billion. Clearly the decrease in assets under management overall reflects the severity of the market in 2008.

Top 10 for 2009

Here are the top 10 hedge funds, with links leading to that specific fund's portfolio holdings:

1. Bridgewater Associates (Ray Dalio) with $38,600 (in millions)
2. JPMorgan with $32,893 (in millions)
3. Paulson & Co (John Paulson) with $29,000 (in millions)
4. D.E. Shaw & Co (David E Shaw) with $28,600 (in millions)
5. Brevan Howard Asset Management with $26,840 (in millions)
6. Man Investments with $24,400 (in millions)
7. Och-Ziff Capital Management with $22,100 (in millions)
8. Soros Fund Management (George Soros) with $21,000 (in millions)
9. Goldman Sachs with $20,585 (in millions)
10. Tie: Farallon Capital Management (Thomas Steyer) & Renaissance Technologies (Jim Simons) both with $20,000 (in millions)

Undoubtedly, you can find many of the hedge fund managers listed above on Forbes' billionaire list. Not only do the funds above garner the most assets under management, but they receive some of the highest compensation around for their production. We've covered many of the hedge funds portfolios listed in the top 10 above. Additionally, practically all of the funds we cover in aggregate are in the top 100.

Moving on Up

A noted value player, Seth Klarman's Baupost Group benefited from 2008 the most in terms of rankings. Baupost's assets grew over the past year and find themselves as the hedge fund to make the biggest leap between years. Baupost was 49th in 2008 and now sits in 13th for 2009. This past year was Klarman's first losing year as his funds were down around 7 to 12% but had practically no redemptions. You can view their portfolio holdings here. Paulson & Co was a notable mover on the list as well, as they jumped from 8th place in 2008 to 3rd place in 2009 (their portfolio here). London based Brevan Howard also benefited as they moved from number 11 in 2008 up to number 5 in 2009. Their 2008 performance was quite solid as their main fund finished up 20.4%.

Sliding Down

In terms of funds that fell in the rankings, Thomas Steyer's Farallon Capital Management definitely fits the bill. His fund lost nearly 45% of their assets due to redemptions and poor performance. Their funds were -24% on average for 2008 and you can see where their pain came from by checking out their portfolio holdings. Another notable mover not listed in the top 10 would be global macro giant Bruce Kovner's Caxton Associates. Last year, Caxton was number 16 on the list. However, due to loss of assets they are now number 51 on the 2009 rankings.

Other Notes

Stephen Mandel's Lone Pine Capital was ranked 17th in 2008 and comes in 21st for 2009. Their assets were down 28% but only due to poor performance, not really because of redemptions. You can check out the comprehensive list of hedge fund portfolios we cover here. To see how some of these hedge funds are performing, you can find their latest numbers in our performance numbers list. And, of course, head to Alpha if you wish to purchase the full list of rankings.