Sandler Capital Tops Hedge Fund Returns with a Big Position in Gold

August 22, 2019 | Alts Education
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Sandler Capital Management has $ 2.1 billion in assets under management.

Based on its long positions, gleaned from regulatory filings, it would be up 30% this year, according to CNBC.

How’d they get it done? Gold.

Sandler Capital boosted its stake in the SPDR Gold Trust by about 180% to $ 38 million in Q2. The position was a clairvoyant play against looming volatility.

That return would be double the S&P 500’s return, according to data from hedge fund tracker Symmetric.io.

CNBC used this data to generate a list of the top five stock picker hedge funds based on a proprietary performance indicator called StockAlpha.

No rockstars at Sandler

Interestingly, relatively unknown managers run Sandler Capital. The firm shows that one needn’t be a hedge fund rockstar to achieve stellar stock-picking returns.

Remember however that Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, recently made a bullish call on gold. In his opinion, a “paradigm shift” in investing was round the corner because of falling interest rates, high debt, and slowing earnings companies.

Of crashing yields and yield curve inversions

Recessionary fears and global macroeconomic turmoil have pushed investors into ‘risk-off’ mode. They have fled to the comparative safety of even low yielding bonds in a desperate move to preserve capital. This has pushed yields down to abnormally low levels and even caused what is known as a “yield curve inversion,” a hitherto reliable indicator of an upcoming recession.

In a parallel move, they have also shifted to hard, safe-haven assets such as gold, pushing up the prices of the yellow metal beyond the psychological level of $ 1500 per ounce recently.

CNBC’s other top stock picker hedge funds

Based on the Symmetric.io data and the StockAlpha indicator, other front-row hedge funds that have delivered impressive year-to-date returns. That list includes Bluespruce Investments, Goodnow Investment Group, and Oaktree Capital Management.

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