25 Best Hedge Funds of Q2 2011

Insider Monkey tracks 300+ hedge funds and several other prominent investors. We believe investors can beat the index funds by imitating best hedge funds’ stock picks. One of the ways of determining the “best” hedge funds is measuring the performance of their 13F portfolios. Our methodology limits its analysis to S&P 500 constituents. This way we can compare hedge funds’ performance to the S&P 500 index and we can also compare one hedge fund to the other. Some hedge funds have stocks and put options, or call options and put options in the same company. We excluded those holdings entirely because we don’t know the cost and strike prices of options.

S&P 500 index gained 0.1% during the second quarter including dividends. Healthcare, utilities, and consumer staples sectors performed much better than the index. Financials and energy sectors performed much worse than the index. Some hedge funds specialize in these sectors and their returns will be artificially high or low because of their sector bias. We haven’t adjusted returns for sector bias. There are also other hedge funds that invest mostly in small and medium cap stocks and these hedge funds have only small number of investments in S&P 500 constituents. We haven’t excluded any hedge funds from our sample due to small number of observations but we reported the number of stocks that went into the calculations.

Carl Icahn - Icahn Capital Lp

Based on our calculations here are the 25 best hedge funds of second quarter:

Fund No of Stocks Q2 Return
Corriente Advisors 3 17.7%
Hawkshaw Capital Management 4 14.0%
LaGrange Capital 8 13.4%
Manatuck Hill Partners 10 12.6%
Lane Five Capital 6 11.5%
Icahn Capital LP 9 10.4%
Criterion Capital 8 9.8%
Accipiter Capital Management 8 9.4%
OrbiMed Advisors 38 8.7%
Arrow Capital Management 9 8.4%
Solus Alternative Asset Management 4 8.1%
Akre Capital Management 13 7.3%
White Elm Capital 8 7.2%
Silver Capital Management LLC 11 7.0%
Halcyon Asset Management 2 6.9%
Amber Capital 6 6.8%
JANA Partners 9 6.7%
ValueAct Capital 9 6.5%
Visium Asset Management 67 6.5%
Scout Capital Management 10 6.2%
Gates Capital Management 10 6.1%
Healthcor Management LP 25 6.0%
MHR Fund Management 1 6.0%
Brencourt Advisors 10 5.9%
Trian Partners 6 5.8%

We provided links to each hedge fund’s page on Insider Monkey. You can check out each hedge fund’s top holdings, increases and reductions in positions, new positions, and completely sold out positions. It is completely free too.

Corriente Advisors’ three picks among the 500 S&P 500 constituents returned 17.7% on a value-weighted basis. Their best performing pick was Biogen (BIIB) which returned 45.5%. Mark Hart’s Corriente also had a position in Devry (DV) and this stock also managed to beat the S&P500 index by 7.5 percentage points.

If you wonder how other hedge funds performed during the second quarter and first half of the year, we will post our calculations on each hedge fund’s page shortly. We will also publish another article listing the 25 worst performing hedge funds during Q2 of 2011.

Stay tuned!

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