Hedge Fund Annus Horriblus

July 5th, 2011
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Contributed by: The Mad Hedge Fund Trader
Making the rounds in Europe, I managed to hook up with hedge fund friends in London, Milan, and Geneva, and what I saw was not a pretty picture. Most hedge funds are having a terrible year.

According to HSBC’s private bank, of 300 hedge funds they track, only nine are up double digits, and most of those are narrowly mandated technology funds. Almost every fund lost money in June. And oh, how the mighty have fallen, with the biggest funds producing the soggiest performance.

Bruce Kovner’s Caxton Associates’ main fund is off by 3.88% this year, Paul Tudor Jones’ Tudor Investment Corporation is down by 2.25%, Louis Bacon’s Moore Capital Management took a 2.84% hickey, and Fortress Investment Group has dipped 2.44%. Emerging markets have done worse, with Brevan Howard Asset Management’s dedicated fund taking a 4.64% knock. John Paulson’s Paulson & Co. pursued a bullish strategy in the banks which I never understood and lost an eye popping 20%.

For a start, you can blame the almost complete absence of any clear trends this year. The S&P 500 is up was up 7% in the first half, with the entire move occurring only during the last three days. Until then, we spent all out time inside a narrow 120 point, 9% trading range. Ditto for Treasury bonds, which are up only 3 points on the year with a yield so small you need a magnifying glass to find it. The ETF (TLT) stuck inside a miserable 10 point, or 11% range.

How about the Euro? Is the never ending sovereign debt crisis presenting great shorting opportunities? Not a chance. The European currency is up 7% this year. The only way to pay the bills with a move like that is to leverage up like crazy, something that risk managers are loathe to do.

How about commodities? Did Dr. Copper, the only metal with a PhD in economics, open its wallet for hedgies this year? Nope. The copper ETF (CU) is actually down 1%. Maybe it should go back to night school for another course in macroeconomics?

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For Detailed Investor Profiles on these Investors, click below:
Caxton Associates
Fortress Investment Group
Moore Capital Management
Paulson & Co.
Tudor Investment Corporation
Related People: Aaron Rowe ; Andrew Hoine; Andrew Law; Bruce Kovner; Daniel Mudd*; Greg Coffey; Henry Bedford*; James Pallotta*; Jean-Philippe Blochet; John Paulson; Jude Driscoll; Louis Bacon; Mena Gerowin*; Michael E. Novogratz; Mike Barr; Paul Tudor Jones, II; Randal Nardone; Robert Kauffman*; Sheru Chowdhry; Stuart Merzer; Wesley Edens; William F. Callanan*
Related Entities: Altar Rock*; BVI Global Fund Ltd; Caxton Alpha Equity LLC; Caxton Associates; Caxton Equity Growth (BVI) Ltd; Caxton Global Investments USA LLC; Caxton Healthcare Trading LLC; Caxton International LTD; Drawbridge Global Macro Funds; Fortress Commodities Fund LP; Fortress Partners Funds; Fortress Value Recovery Funds ; Logan Circle Partners; Moore Capital Emerging Markets; Moore Global Fixed Income; Moore Japan Restructuring; Newcastle Investment Corp; Paulson Advantage Master Ltd; Paulson Advantage Plus Master Ltd; Paulson Real Estate Recovery Fund; Paulson Recovery Fund; PCI; Raptor Global*; Remington Investment Strategies; Tudor Investment Corp; Tudor Investments; Tudor Momentum Futures Fund; Tudor Tensor; Valence Capital Management
Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News; Hedge Fund Resources and Featured Partner News

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