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Hedge Funds Are Getting Their Butts Kicked Too

by: Market Folly September 05, 2008    

Market Folly

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Well, we recently got an update as to just how poorly hedge funds are performing year to date. Don't get me wrong, there are of course some standout performers. But, for the most part, they are taking it on the chin. So, if you are an individual investor getting your ass handed to you in this market.... you're not alone. Even some of the best and brightest in the game are right there with you. Hell, you're probably even outperforming some of these funds. Courtesy of the Wall Street Journal, we get a look at many notable hedge fund's performance year to date.

The Standout Performers

  • $35 billion Paulson & Co: +18% ytd
  • $26.3 billion Brevan Howard: +16% ytd
  • $37.1 billion D.E. Shaw: +8% ytd
  • $30.9 billion Bridgewater Associates: +6% ytd
  • $33.3 billion Och-Ziff Capital: +0.5% ytd
  • $16 billion Winston Capital: +10% ytd
  • $10 billion Caxton Associates: +5% ytd
  • $17 billion Tudor Investment Corp: +3% ytd
  • $16 billion SAC Capital: +1.5% ytd


The Not-so Standout Performers

  • $49.3 billion Highbridge/JP Morgan (Multistrat fund): -2% ytd
  • $33 billion Farallon Capital: -6% ytd
  • $23.7 billion GLG Partners: -14% ytd
  • $13 billion Eton Park Capital: -1% ytd
  • $19 billion Citadel Investment Group: -6% ytd
  • $18 billion Lone Pine Capital: -8.5% ytd
  • $12.5 billion TPG-Axon: -11% ytd
  • $8 billion Cantillon Capital: -12% ytd
  • $15 billion Atticus Capital: -25% ytd


The Slightly Mixed Bag

  • $29.5 billion Renaissance Technologies: One of their funds is -1% ytd, while their signature Medallion fund is +40% ytd
  • $26.9 billion Goldman Sachs: One of their funds is -2% ytd, while their Global Alpha fund is +17% ytd

And, according to Hedge Fund Research, Inc., hedge funds are having their worst year since 1990 (when they started tracking).

They show that the average hedge fund is -3.43% ytd compared to -12.65% in the S&P500 and +1.05% in the Lehman Bros Bond Index.

So, results all across the board. Interesting to note, though, that Atticus Capital is down 25% year to date. Just yesterday, there were rumors circulating that they were liquidating, as I wrote about here. Tim Barakett, the founder of Atticus, came out and denied those rumors. The reason for such a large decline is pretty easy to pinpoint. As I've written about before, their portfolio had very heavy exposure to the likes of Freeport McMoran (FCX), Mastercard (MA), and NYSE Euronext (NYX); all of which have really been beaten down badly as of late. So, the rumors of liquidation weren't completely illogical, seeing as how the fund is down big this year. But I want to reiterate again that they have denied the rumors that they were liquidating.

On another note, the algorithm master Jim Simons and his Renaissance Technologies Medallion fund are up big this year; very big. That's all I can really say about that, seeing as his entire operation is one giant quant enigma. D.E. Shaw & Co, fellow quant masters, are doing decently, up 8% year to date in this horrid tape.

Lone Pine Capital, managed by Stephen Mandel (who I frequently cover here on the blog), isn't having the best of years, but isn't getting slaughtered like Atticus is. Lone Pine is down a little over 8% year to date. You can view their most recent portfolio holdings as I analyzed here.

The "Commodities Corp Offspring," Paul Tudor Jones and Bruce Kovner, have been playing the commodities markets smartly with their macro funds, it seems. Jones' Tudor Investment Corp is up 3% ytd, while Kovner's Caxton Associates is up 8% ytd. With the wild swings in the commodities markets claiming the life of the Ospraie fund, I'm sure Tudor Jones and Kovner are happy to turn a profit. This year has been one wild ride, to say the least.

And, lastly, John Paulson is still kicking ass and taking names; up 18% year to date. You'll remember that Paulson correctly pegged the subprime crisis last year and profited handsomely from it.

So, there you have it. See how you stack up against some of the most revered names in the game. Some are dominating, while others are getting dominated. Welcome to the bear market.


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This article has 9 comments:

  •  
    Sep 06 12:58 PM
    It's curious that your definition of "butts kicked" includes only ONE - out of eleven negative performances - that is below the broader market index.

    "The average hedge fund is -3.43% ytd compared to -12.65% in the S&P500 ..."

    Sounds to me like the average hedge fund was a better buy than the S&P 500.

    "... and +1.05% in the Lehman Bros Bond Index."

    Do you think bonds have much upside from here, compared to the average hedge fund?

    I think either your perspective is so skewed as to be functionally useless, or you're writing about "hedge funds getting their butt kicked" out of sheer sensationalism - which makes your writing functionally useless.
    Reply
  •  
    Sep 06 03:47 PM
    It will be interesting to see in the coming weeks if Hedge Funds try to artificially bump up the stock price of their associated oil and gas producers thus keeping their profit margins up. If they dont, they may go under along with the producers.
    Reply
  •  
    Sep 06 04:24 PM
    fire the computers.
    Reply
  •  
    Sep 06 08:37 PM
    Well all the fuss about Hedge funds is quite amusing. If all the monrninstar funds whith negative return would liquidate, there would be no one left to hype the markets on CNBC

    Most of the "good" Hedge fund are doing well considering the overall market conditions...the one i am in is just fine with +23% YTD...though the summer was tough...

    OH
    Reply
  •  
    Sep 06 08:42 PM
    As stated by Mebane Faber from Worldbeta... Off "9114 funds Morningstar ranks as "all-diversified stock funds". Of these funds, the average performance is around -12% YTD...and only 50 of them a positive YTD...
    Reply
  •  
    Sep 06 09:02 PM
    No DooDahs: Actually, seeking alpha changed the title of my article as they often do for whatever reason. The original title of the article on Market Folly is simply: "Hedge Fund Year to Date Returns (Paulson, D.E. Shaw, SAC, & More)" as seen here: marketfolly.blogspot.c...

    settle down
    Reply
  •  
    Sep 06 09:32 PM
    Ah yes, that fine editorial "value added" that I enjoyed so much back in the day. My apologies.

    I hope some readers clicked on their ads because of the title.

    Did YOU get any clickthru from it?
    Reply
  •  
    Sep 07 01:28 AM
    Talking about the 6 month performance of 20 hedge funds as if they were the hedge fund universe is worthless.
    Reply
  •  
    Sep 07 11:30 PM
    Funny how the number one hedge fund performer is being advised by the former chariman of the US Federal Reserve. Isn't that cute and cozy. Can it get any more worm and fuzzy than this.
    Reply
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