Steven Cohen's SAC Capital Files 13G on Vanda Pharma (VNDA)

In a 13G filed recently with the SEC, hedge fund SAC Capital has disclosed an 8.6% ownership stake in Vanda Pharmaceuticals (VNDA). They now own 2,279,423 shares. You may be familiar with this stock as it has recently surged huge after their schizophrenia drug got FDA approval.

In our May 2009 post on hedge fund performance numbers, we saw that SAC Capital is up 13.93% for the year thus far. Recently, they were ranked #17 in Barron's hedge fund top 100 rankings. Taken from their website, “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.”

Since inception, their funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. Stevie Cohen was recently on Forbes' billionaire list, as well as the top hedge fund manager losers of 2008, due to the rough year they had. And, for those curious as to how hedge fund managers live, you can see a picture of Cohen's house here.

Stay tuned in the coming week as we'll check in on the rest of SAC's portfolio in our hedge fund portfolio tracking series.

Taken from Google Finance,

Vanda Pharmaceuticals is "a biopharmaceutical company focused on the development and commercialization of clinical-stage drug candidates for central nervous system disorders, with worldwide commercial rights to two product candidates in clinical development."

Steven Cohen's SAC Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is SAC Capital, founded by Steven Cohen. Taken from their website, “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.”

Since inception, their funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. In terms of recent performance, SAC was +3% for March 2009 and sits up around 10% year to date. Stevie Cohen was recently on Forbes' billionaire list, as well as the top hedge fund manager losers of 2008, due to the rough year they had. And, if you're curious, you can see a picture of Cohen's house here.

Disclaimer: SAC are very active traders and at any given time can account for up to 3% of the volume on the New York Stock Exchange and up to 1% on the Nasdaq. As such, we are merely tracking their portfolio for fun and for entertainment purposes only. A lot of readers request the info just out of curiosity, so here it is. We do not recommend using their portfolio for investment ideas etc. The funds we typically track have longer investment timeframes and are more appropriate to track over time. SAC on the other hand trades so frequently that we are merely posting this for fun.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Teva Pharma (TEVA), Honeywell (HON), Sotheby (BID), Exxon Mobil (XOM) Puts, Exxon Mobil (XOM) Calls, Life Technologies (LIFE), Starbucks (SBUX), St Jude (STJ), Occidental Petroleum (OXY), Steel Dynamics (STLD), Range Resources (RRC), Weatherford (WFT), Harsco (HSC), Advance Auto Parts (AAP), CH Robinson (CHRW), Clean Harbors (CLHB), United States Oil Fund (USO) Calls, Exterran Holdings (EXH), Praxair (PX), Fastenal (FAST), Agilent (A), Bank of NY Mellon (BK), Wendy's Arby's (WEN), Wyeth (WYE), Fedex (FDX), Duke Energy (DUK) Calls, Monsanto (MON) Calls, HMS Holdings (HMSY), Puget Energy (PSD), AmerisourceBergen (ABC)


Some Increased Positions (A few positions they already owned but added shares to)
Vale (RIO): Increased by 2,031%
SPDR S&P500 (SPY) Puts: Increased by 1,440%
SPDR S&P500 (SPY): Increased by 740%
Liberty Media (LMDIA): Increased by 656%
F5 Networks (FFIV): Increased by 257%
Ishares Australia (EWA) Calls: Increased by 100%
Schlumberger (SLB) Calls: Increased by 84%
Salesforce.com (CRM): Increased by 27%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dominion Resources (D) Bond: Reduced by 53%
US Bancorp (USB) Bond: Reduced by 53%
Qwest Comunication (Q) Bond: Reduced by 50%
Marathon Oil (MRO): Reduced by 20%


Removed Positions (Positions they sold out of completely)
Hutchinson Technology Debt, Exult Debt, Valeant Pharma Bond, Carnival Bond, Chesapeake Energy Bond, Adaptec Bond, Prudential Financial Bond, Red Hat Bond, Imclone Bond, Transocean Debt, Affymetrix Bond, Watson Pharma Bond, Agere Systems Debt, Sepracor Bond, Novell Bond, Barr Pharma (BRL), Service Corp (SCI), Quanta Services (PWR), US Steel (X), Celanese (CE), SPX (SPW), Republic Services (RSG), Ishares S&P100 (OEF) Calls, Powershares QQQ (QQQQ) Calls, Las Vegas Sands (LVS), Invitrogen (IVGN), Genzyme (GENZ), Alpharma (ALO), Flowserve (FLS), Whiting Petroleum (WLL)


Top 15 Holdings (by % of portfolio)

1. Laboratory Corp (LH) Bond: 5.34% of portfolio
2. Danaher (DHR) Bond: 4.83% of portfolio
3. Hasbro (HAS) Bond: 4.45% of portfolio
4. Cymer (CYMI) Bond: 2.48% of portfolio
5. Telebras (inactive) Bond: 2.33% of portfolio
6. SPDR S&P 500 (SPY): 2.13% of portfolio
7. SPDR S&P 500 (SPY) Puts: 2.01% of portfolio
8. Teva Pharma (TEVA): 1.96% of portfolio
9. Dominion Resources (D) Bond: 1.57% of portfolio
10. US Bancorp (USB) Bond: 1.35% of portfolio
11. Chevron (CVX): 1.3% of portfolio
12. USF&G (inactive) Debt: 1.29% of portfolio
13. Omnicom Group (OMC) Bond: 1.25% of portfolio
14. Qwest Communications (Q) Bond: 1.2% of portfolio
15. Vale (RIO): 1.17% of portfolio

Just like when we covered Renaissance's portfolio yesterday, we are not going to attempt to explain the rhyme or reason behind SAC's picks. We can't gauge why they are in them, nor do we know how long they will be holding them. As such, take everything with a grain of salt due to their trading nature. However, one thing you can't help but notice is their tendency to gravitate towards bonds; the majority of their top holdings are bonds/debt. Their assets listed in the 13F essentially got chopped in half, due to some combination of poor performance, decreasing equities/bonds/options exposure, and some redemption requests. Assets from the collective long US equity, options, and note holdings were $7.7 billion last quarter and were $3.45 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered:

• Well known gurus such as: Carl Icahn, Warren Buffett, & George Soros
• 'Tiger Cub' portfolios: Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, Chase Coleman's Tiger Global, Chris Shumway's Shumway Capital Partners, Touradji Capital Management (Paul Touradji), and John Griffin's Blue Ridge Capital
• Global macro giants: Bruce Kovner's Caxton Associates, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital, & Paul Tudor Jones' Tudor Investment Corp
  
• Value & Activist players like: Bill Ackman's Pershing Square, Seth Klarman's Baupost Group, Art Samberg's Pequot Capital, & David Einhorn's Greenlight Capital
• Concentrated portfolios like: Bret Barakett's Tremblant Capital, & Timothy Barakett's Atticus Capital
• Some solid names: Paulson & Co (John Paulson), Thomas Steyer's Farallon Capital Management, and Eric Mindich's Eton Park Capital
• Newer funds on the scene: James Pallotta's Raptor Capital Management, Anand Parekh's Alyeska Investment Group, & David Stemerman's Conatus Capital
• Troubled funds: Jeffrey Gendell's Tontine Associates
• Quant & high frequency trading funds (purely for fun/entertainment): Jim Simons' Renaissance Technologies (Rentec), Steven Cohen's SAC Capital
  

We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

SAC Capital Portfolio Update - Tons of 13G Filings

SAC Capital, the $14 billion hedge fund firm ran by Steven Cohen has been quite busy with SEC filings as of late. We recently covered SAC's portfolio holdings here. Since then, SAC has amended various 13G filings with the SEC, adjusting many of the positions in their portfolio. All of the following 13G filings were made due to SAC's trading activity on December 31st, 2008 or January 1st, 2009. In no particular order:

1. United Therapeutics (UTHR) - SAC now shows that they have a less than 0.01% stake in UTHR. Back on September 30th, 2008, they had owned 209,562 shares of UTHR. So, they have effectively sold off almost all of their stake.
2. OM Group (OMG) - SAC now has a 0% stake in OMG and holds 0 shares.
3. Savient Pharmaceuticals (SVNT) - SAC has sold out of their position of SVNT completely and now owns 0 shares according to their 13G. They previously owned 50,675 shares.
4. True Religion Apparel (TRLG) - SAC sold completely out of their TRLG position and show 0 shares as of their latest 13G. They previously had held 278,695 shares.
5. Zale Corporation (ZLC) - SAC now holds 0 shares of ZLC. They previously held 76,049 shares.
6. Tween Brands (TWB) - SAC sold out of their entire position in TWB.
7. WCI Communities (WCIMQ) - They no longer hold any shares of WCIMQ.
8. Pilgrim's Pride (PGPDQ) - SAC sold out of all of their PGPDQ.
9. Cabot Corporation (CBT) - They no longer own any CBT.
10. Albemarle (ALB) - SAC now holds 0.3% stake in ALB (300,000 shares). They previously owned 200,000 shares.
11. Inspire Pharmaceuticals (ISPH) - They no longer own any ISPH.
12. Incyte (INCY) - SAC now has disclosed they have a 0.4% stake in INCY, reducing their holdings drastically from their previous holdings in excess of 2 million shares.
13. Indevus Pharmaceuticals (IDEV) - They sold completely out of their IDEV.
14. Keryx Biopharmaceuticals (KERX) - SAC no longer holds KERX.
15. Emergency Medical Services (EMS) - SAC has disclosed they now only own a 1.2% stake in EMS, drastically reducing their position from last disclosure.
16. Charlotte Russe (CHIC) - They sold completely out of their position.
17. Cymer (CYMI) - They also sold completely out of CYMI.
18. Biomarin Pharmaceutical (BRMN) - SAC sold out of their position entirely.
19. Chiquita Brands (CQB) - They no longer own this name.
20. Applied Energetics (AERG) - They also sold completely out of this name.
21. Century Aluminum (CENX) - Sold completely out of their position.
22. American Apparel (APP) - SAC no longer owns any APP.
23. Acorda Therapeutics (ACOR) - Sold completely out of this name.
24. P.F. Chang's China Bistro (PFCB) - Disclosed they now own a 1.3% stake in the company.
25. Vaxgen (VXGN) - Now showing a 1.6% stake in VXGN.
26. Fresh Del Monte Produce (FDP) - Now show a less than 0.1% ownership stake.
27. Navistar International (NAV) - Disclosed they now have a 2.1% stake in NAV.
28. Vanda Pharmaceuticals (VNDA) - Sold completely out of their position.
29. Sanderson Farms (SAFM) - Sold completely out of this name as well.
30. Assured Guaranty (AGO) - They now have a 0.2% ownership stake in AGO.
31. Akorn (AKRX) - Now show a 0.3% ownership stake.
32. Auxilium Pharmaceuticals (AUXL) - Also showing a 0.3% ownership stake in this name as well.
33. Stewart Enterprises (STEI) - SAC now has a 4% ownership stake in STEI.
34. Ocean Power Technologies (OPTT) - Due to activity on January 1st, 2009, SAC now shows a 4.9% ownership stake in the company
35. Hasbro (HAS) - Activity with their shares on December 31st, 2008 leads SAC to disclose a 3.6% ownership stake in HAS.
36. Cougar Biotechnology (CGRB) - SAC has disclosed they now have a less than 0.1% ownership stake in the company.
37. Orexigen Therapeutics (OREX) - SAC now shows a 4.9% ownership stake in OREX as a result of their amended 13G filing.
    

As you can see, from a collective 37 separate 13G filings, SAC was reducing a lot of position sizes for the most part. We just want to again remind everyone that SAC has a tendency to move in and out of positions very quickly, so keep that in mind. We're merely relaying the information that was filed with the SEC and we will update any other positions they may change in the future. SAC decreased equity exposure by almost half from quarter to quarter (based on 13F filings with the SEC) and it was reported SAC was going to cash back in October. Also interesting is that many of the largest positions in their portfolio consist of debt of various companies.

Taken from their website, “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.”

Since inception, their funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. They are very active traders and at any given time can account for up to 3% of the volume on the New York Stock Exchange and up to 1% on the Nasdaq. You can view the rest of their portfolio holdings here (just keep in mind the above recent changes to their portfolio).

SAC Capital (Steven Cohen): Hedge Fund Portfolio Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

Next up is SAC Capital, founded by Steven Cohen. Taken from their website, “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.” Since inception, their funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. They are very active traders and at any given time can account for up to 3% of the volume on the New York Stock Exchange and up to 1% on the Nasdaq. And, if you're curious, you can see a picture of Cohen's house here.

Before beginning, we do want to stress that since SAC actively trades positions quite frequently, tracking them via 13F is not necessarily beneficial and we advise that those reading take this with a grain of salt. We are simply covering them since they are a prominent fund and many of our readers wondered what they were up to, out of curiosity.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Genentech (DNA)
Navistar (NAV)
Amgen (AMGN)
SPX (SPW)
IShares TR Option (IJS) Calls
Salesforce.com (CRM)
Powershares QQQ (QQQQ) Calls
Flowserve (FLS)
CMS Energy (CMS)
Reinsurance Group of America (RGA-B) Class B
Transocean (RIG) Calls
Allergan (AGN) Calls
Danaher (DHR) Puts
Select Sector Industrial ETF (XLI)
Semiconductor Holdrs (SMH)
Transocean (RIG)
Newmont Mining (NEM) Calls
Oil Services ETF (OIH) Calls
Transalta (TAC)
Hewlett Packard (HPQ) Puts
American Electric Power (AEP)
Canadian National Railway (CNI)
Bristol Myers (BMY-P) Calls
QQQ (QQQQ) Puts
Airmedia Group (AMCN)
Select Sector SPDR TR (XLK) Calls
McDermott (MDR)
ITT Corp (ITT)
IAC Interactive (IACI)
Laboratory Corp (LH) Puts


Some Increased Positions (A few positions they already owned but added shares to)
Freeport McMoran (FCX): Increased position by 5,056%
JPMorgan Chase (JPM): Increased position by 2,598%
Crown Castle (CCI): Increased position by 794%
Prudential (PHR) Debt: Increased position by 760%
Barr Pharma (BRL): Increased position by 88%
Merrill Lynch (MER) Debt: Increased position by 74%
Imclone Debt (IMCL): Increased position by 31%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Newmont Mining (NEM): Reduced position by 34.5%
Transocean (RIG) Sedco Debt: Reduced position by 13.3%
Chevron (CVX): Reduced position by 11%
RedHat (RHT) Debt: Reduced position by 9%


Removed Positions (Positions they sold out of completely)
Anheuser Busch (BUD)
Wyeth (WYE)
Devon Energy (DVN) Debt
Lockheed Martin (LMT) Debt
Ameriprise Financial (AMP)
Devon (DVN) Debt
Owens Illinois (OI)
Elan (ELN)
Mosaic (MOS)
Tidewater (TDW)
Cabot (CBT)
Pilgrim Pride (PPC)
Halliburton (HALQL) Debt
SPDR TR (SPY) Calls
Cummins (CMI)
Amazon (AMZN) Debt
Baker Hughes (BHI)
Harsco (HSC)
Take-Two Interactive (TTWO)
United Technologies (UTX)
Sanderson Farms (SAFM)
Suntrust Banks (STI)
Cameron (CAM)
Fastenal (FAST)
Costco (COST) Calls
Countrywide Financial Debt
Activision – old shares
Hologic (HOLX)
AIG (AIG-PA) Preferred
Anheuser Busch (BUD) Puts


Top 20 Holdings (by % of portfolio)

1. Genentech (DNA): 3.6% of portfolio
2. Danaher Corp (DHR) Debt: 2.9% of portfolio
3. Hasbro (HAS) Debt: 2.6% of portfolio
4. Laboratory Corp (LH) Debt: 2.5% of portfolio
5. Navistar (NAV): 1.9% of portfolio
6. Barr Pharma (BRL): 1.7% of portfolio
7. Dominion Res (D) New Debt: 1.7% of portfolio
8. US Bancorp (USB) Debt: 1.5% of portfolio
9. Newmont Mining (NEM): 1.3% of portfolio
10. Novell (NOVL): 1.2% of portfolio
11. Freeport McMoran (FCX): 1.2% of portfolio
12. Qwest Communications (Q) Debt: 1.1% of portfolio
13. Cymer (CYMI) Debt: 1.1% of portfolio
14. Sepraco (SEPR) Debt: 1.1% of portfolio
15. Agere (AGR) Debt: 1.1% of portfolio
16. Amgen (AMGN): 1.03% of portfolio
17. Watson Pharma (WPI) Debt: 0.92% of portfolio
18. KV Pharma (KV-A) Debt: 0.91% of portfolio
19. Merrill Lynch (MER) Debt: 0.86% of portfolio
20. Affymettrix (AFFX) Debt: 0.82% of portfolio



Assets from the collective long US equity, options, and note holdings were $14.3 billion last quarter and were $7.7 billion this quarter. SAC decreased equity exposure by almost half from quarter to quarter and it was reported SAC was going to cash back in October. Also interesting is that many of the largest positions in their portfolio consist of debt of various companies. We also wanted to point out that since this 13F filing, SAC has been actively submitting various 13G filings and we have covered those 37 additional changes to their portfolio.

We have not detailed the changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity, etc). This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
• Chase Coleman's Tiger Global
• Stephen Mandel's Lone Pine Capital
• Lee Ainslie's Maverick Capital
• John Griffin's Blue Ridge Capital
• Andreas Halvorsen's Viking Global
• Chris Shumway's Shumway Capital Partners
• Touradji Capital (Paul Touradji)
• Eric Mindich's Eton Park Capital
• Barry Rosenstein's Jana Partners
• Seth Klarman's Baupost Group
• Art Samberg's Pequot Capital Management
• Ricky Sandler's Eminence Capital
• Thomas Steyer's Farallon Capital Management
• Harbinger Capital Partners (Philip Falcone)
• Jeffrey Gendell's Tontine Associates
• Jim Simons' Renaissance Technologies
• Ken Griffin's Citadel Investment Group
  

Overall, its been one of the worst years ever for hedge funds, as we noted in our November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Cohen, SAC, & hedge funds:
- Picture of Cohen's house
- Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers

Investor Letters

Here are some more recent hedge fund investor letters. Do note that these are all .pdf files.

Maverick Capital (Lee Ainslie) - Portfolio holdings detailed here.

Colony Capital

Oaktree Capital Management

Hayman Advisors LP (Kyle Bass)

Balyasny Asset Management LP

Baupost Group (Seth Klarman)

Perry Capital

And, taken from Bloomberg, we're seeing that a few hedge funds that have typically been closed have since re-opened those funds to add capital,

"Steven Cohen, David Einhorn, Paul Singer, and Alan Howard are doing what most hedge-fund managers can't these days -- raising money from investors.

Singer's Elliott Management Corp. added $3 billion in the third quarter and Howard's Brevan Howard Asset Management LLP garnered new cash as they posted investment gains in a year when the average fund has lost 20 percent, people with knowledge of matter said. Cohen's SAC Capital Advisors LLC and Einhorn's Greenlight Capital Inc. have allowed investors into funds that had been closed since 2005, with Einhorn seeking several hundred million dollars this month."

Both SAC and Greenlight have suffered losses this year, as we detailed in our hedge fund performance update.

SAC Capital Going to Cash?

Dealbreaker was recently out saying they've heard Steven Cohen's SAC Capital has gone to cash.

"We have it on very good authority that on Wednesday in Stamford, Steve Cohen told his trading floor, 'You're all idiots. We're going to cash. I'll see you in January.' They are not closing down; just sitting out the bull shit. No follow-up joke. Because it's apparently true."

Take it for what it's worth.

Worst Year for Hedge Funds in a Long Time

Well, that's stating the fairly obvious, now isn't it? But, here are the cold hard facts. Hedge funds who we all adored for their dominating performance figures over the past few years are now struggling to stay positive on the year. It's no longer a question of "How much will we dominate this year?" But, instead, "Can we scrape by?"

Case in point: We've already seen the closure of Ospraie's $3 billion commodities fund after it lost 40% this year, which I wrote about here. This just goes to show that even those who had learned from some of the best can be brought to their knees. Dwight Anderson, manager of Ospraie, had learned from both Julian Robertson and Paul Tudor Jones, legends in their respective strategies.

Next, we've got word that even more typically dominant funds are struggling now more than ever. Ken Griffin's Citadel has seen their Kensington fund down 15% for the year, as of a week ago. This multistrat fund hasn't had a losing year since 1994. All this comes at a time when I noted that Citadel is trying to start a $1 billion macro fund. And, I can't blame them. Although many macro funds have had a rough summer, they are still up on the year. And, I think you'll see that macro funds will be the longer term winners as we continue to see an evolving financial landscape.

Stevie Cohen's SAC Capital is also down 3.5% this year. Well, at least his multistrat fund is. This is his fund's worst year since 1992.

I recently wrote that Boone Pickens' BP Capital has lost nearly $1 billion so far this year. I also wrote about Harbinger Capital being up 42% at one point earlier this year, only to find themselves up only 2% for the year. Then there's TPG-Axon, who hasn't had a losing year since 2005. They're down 18% year-to-date as of last week.

I could go on and on, but you get the picture. Take all the performance figures I've divulged above and compare them to my hedge fund performance update written at the beginning of September.

Hedge funds are struggling, 401k investors are struggling, and the economy is struggling. The financial landscape is changing and look for numerous hedge fund redemptions and possible liquidations to sprout up in the coming months. There has already been a massive outflow of cash from the hedge fund space as investors become nervous. I expect this trend to continue, and so do the hedge funds. After all, why else would they have set aside an estimated $600 billion in cash accounts to cover these outflows?

It's beyond obvious at this point, but only the strongest will survive.

Running a Hedge Fund is Tough in This Environment

If any of you have ever watched CNBC, you've undoubtedly seen Ron Insana on there at some point. He was one of their big anchors and had been with the channel for a long time. What you might not know, though, is that he eventually left CNBC to start a Hedge Fund of Funds. And, as we see from this article, running a hedge fund, or a fund of funds for that matter, is tough in this environment (duh).