With global hedge fund assets at roughly $3.45 trillion (and growing by double-digit percentages each year), money managers have a greater influence on public and private markets than ever before. DailyAlts covers every element of the hedge fund industry – from changing performance structures to manager strategies, from regulatory oversight to activist holdings, and from new fund launches to the liquidation of underperformers. This channel is your one-stop-shop for daily news and insights for the influential and topical hedge fund space.
Hedge Funds Up Amid Volatile Markets. Hedge funds were up nearly two percent in the month of June. This means that the industry faced its third monthly gain in a row. Although the industry aggregate — as measured by the HFRI Fund Weighted Composite Index — is still down, hedge funds are doing well considering…
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Regulations hobbled banks’ risk-taking abilities after the last global financial crisis. But risk never really went away, it just switched masks. And hedge funds are the new face of unbridled financial adventurism, according to the IMF and the European Central Bank (ECB).
Hedge fund performance was strong at the end of 2019. The Preqin All-Strategies Hedge Fund benchmark returned +2.00% in December, bringing the 2019 return to +11.58%. Funds of hedge funds gained 1.32% in December, generating a 2019 return of +8.34%, the highest annual return since 2013 (+8.82%).
NYMEX and ICE WTI data show that hedge funders were net sellers of crude oil for the week ending January 14. Funds sold roughly 99 million barrels in the six primary crude futures and options contracts. With funds less focused on geopolitical tensions in the Middle East, concerns are rising about the status of the global economy.
Kirkoswald Asset Management will stop accepting new investors when the fund hits nearly $2 billion. Reuters reports that the two-year-old fund will close itself to new investors at the end of March. Concerns about new capital impacting returns are the reason for the decision, according to the report.
Such is the power of Kyle Bass, the hedge fund manager who correctly predicted the crisis from US subprime mortgages in 2007. The Hong Kong Monetary Authority deemed it appropriate to hold a press conference to debunk the latest doom-and-gloom prediction from Bass – that Hong Kong is on the brink of a “full-fledged banking crisis” in 2020. Bass is short the Hong Kong dollar.
The Global Alternatives Outlook was released by JPMorgan Asset Management this week. The report provides a 12-18-month outlook across key alternative asset classes. The report also the views of the CEOs, CIOs, and strategists from the firm’s 15 distinct alternatives investment engines. We take a look at the key takeaways from the report.
Bridgewater Co-CIO Greg Jensen believes that gold prices could hit $2,000 or more. Jensen told the Financial Times this week that geopolitical uncertainty and inflationary policies could press gold at least 30% higher. In the conversation, Jensen cited ongoing tensions between the U.S and Iran. He also mentioned concerns about income inequality in the United States.
Change is afoot at BlackRock, the world’s largest asset manager. The firm is finally veering around to using its enormous financial and investment clout to push for climate action, according to Reuters.
BlackRock CEO warned in his annual letter to investee CEOs, titled “A fundamental reshaping of finance,” that “climate change has become a defining factor in companies’ long-term prospects,” and that markets have been slow to reflect the growing global concerns on climate change.
Tribune Publishing buyouts are coming. And it didn’t take long for newsroom jitters to become a reality. Just two months after Alden purchased a 32% stake in the publisher, it has offered buyouts to Tribune employees. The hedge fund is notorious for reducing employee headcounts and expenses at the publications it purchases.
Bain to Raise Up To $7 Billion For New Long-Only, Public Equities Fund. Alternatives investments specialist Bain Capital will be less ‘alternative’ soon after its proposed fundraise. The new fund will be overseen by Josh Ross, who has been running the firm’s public equities group since 2017.
Hedge fund Citadel issued a statement last week that distanced itself from a former trader who profited from non-public information. Michael Mindlin worked for Citadel between June 2016 and June 2018. However, U.S. regulators just fined him for illegally profiting from tips tied to the Affordable Healthcare Act in 2014. At the time, Mindlin worked for Stelliam Investment Management.
PointState Capital has moved to stop investors from pulling all of their capital in full. According to an investor letter seen by Bloomberg, the company will only allow recent redemption requests to obtain 88% back in cash. The remaining 12% will be distributed as portfolio shares for new vehicles that have “somewhat limited liquidity.”
The DailyAlts Playbook – “Clown Airplanes”, Russian and Chinese-focused funds, AQR staff cuts, and Brexit Beginnings – January 10, 2020
Today, the DailyAlts Playbook talks “Clown Airplanes”, Russian and Chinese-focused funds, AQR staff cuts, Brexit Beginnings, and an offer for our new readers.
AQR Capital has $186 billion under management. Its $2.1 billion Style Premia Alternative Fund lost 8.2% in 2019. And now, the company is cutting its staff for the second straight year. Bloomberg reports that the firm will cut between 5% to 10% of its staff after outflows hit the company again this year.
In 2019, More Hedge Funds Were Shuttered Than Launched. 2019 was the fifth year on the trot that fund closures exceeded openings.
According to data from Hedge Fund Research, more than 4,000 hedge funds have closed shop over the past five years. The $3.2 trillion hedge fund industry is, as a result, down to less than 9,000 funds, says Chief Investment Officer.
Neil Woodford and his CEO Craig Newman earned 9 million and 4.8 million pounds in dividends in the year leading up to the collapse of Woodford Investment Management.
Don Steinbrugge of Agecroft Partners released his annual list of hedge fund trends and predictions for 2020. He covers a few common bases: Hedge fund assets will set a new record, a reduction in expected returns, and how long-short specialty funds will see a boost to AUM.
Famed short-seller Andrew Left’s Citron Capital published its Annual Investor Letter for 2019 on Monday.
“In 2019, our first full year of operation, Citron Capital, LP generated a gross return of 56.4% and net return of 43.3%,” wrote Left. “The Fund’s average exposure during 2019 was 75.8% long and 80.3% short.”
Pershing Square 2019 performance came in at 58.1%. The huge windfall comes after four straight years of losses. That return was also double the return of the S&P 500. In a banner year for passive investors, Ackman showed that activist investing can work with the right formula.
Marshall Wace has taken a short position against Danske Bank. The Danish FSA said that the firm has a short position that reaches the threshold of 0.5% of issued shares.
MIG Capital is pushing Groupon to push its CEO Richard Merage on the shopping-deal provider’s board of directors. The activist fund with $1 billion in AUM owns 5% of Groupon stock. It wants to push Merage on the docket for a vote Groupon’s 2020 annual meeting.
The Horseman Global Fund saw a 35% decline in 2019 as aggressive bets against the market failed to deliver. The fund hiked its net short position to a record 111% of gross assets in October. However, the S&P 500’s 31.5% surge in 2019 pummeled the fund’s positions.
The blistering run-up by the S&P500 left hedge funds in the dust.
Hedge funds really are in the dock. Can they really make money in all market conditions? Their stark underperformance compared to the S&P500 during 2019 is hard to live down.
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