Hedge fund performance in August 2011 was disappointing, according to Financial Times. “Hedge fund industry has failed to live up to its name” a recent article said. The truth is most hedge funds are only partially hedged. As a result they underperform the market when things are rosy, and they outperform the market when the dark clouds are above the financial markets. Unfortunately they lose money when they outperform and this gives ammunition to the hedge fund bashers. Let’s take a look at hedge fund performance in August.
According to the Dow Jones Credit Suisse Hedge Fund Index long/short equity hedge funds lost 6.55% during the first 10 days of August. During the same 10 days, Dow Jones Global Index lost 13.6% and S&P 500 Index was down 13.2%. So, hedge funds managed to beat the market by more than 6 percentage points during the brutal days of August. This is a result of partial hedging. There is no magic to it. Here is how individual hedge funds performed in August (You can see each fund’s entire 13F portfolio by clicking on each fund’s link):
1. John Paulson – Paulson & Co.: John Paulson’s loss in his leveraged Advantage Plus fund reached 39% YTD. The loss in his Advantage fund is only 21%. This doesn’t necessarily mean that John Paulson surrendered $3 Billion of his wealth in just 8 months. John Paulson invested most of his wealth in his “gold-denominated” versions of his funds. GLD is up 25.4% and John Paulson is one of the biggest investors in gold. Paulson’s Credit Opportunities fund is down 1.3% through mid August, but the fund is up 3.4% YTD.
2. Bill Ackman – Pershing Square: Pershing Square Intl lost 6.7% by the middle of the month. The fund is down 10.6% YTD.
3. Dan Loeb – Third Point: Loeb’s Third Point Offshore fund is down 2.7% during the first 10 days of August. The fund is still up 4.3% YTD.
4. Lee Ainslie – Maverick Fund: Maverick Fund is down 9.8% by the 12th of the month. The fund lost 8.4% YTD.
5. Jim Simons – Renaissance: Simons’ Renaissance Institutional Equities gained 1.5% during the first 12 days of August. The fund is also up 19.5% YTD.
6. Israel Englander – Millennium: Englander’s Millennium Intl Ltd lost 1.1% during the first 11 days of August. The fund is up 4.9% YTD.
7. James Dinan – York Capital: Dinan’s York Investment Ltd. lost 5% during the first 10 days of August. The fund is down 3.8% YTD.
8. John Thaler – JAT Capital: JAT Capital’s Offshore fund is up 4.1% during the first 12 days of August. The fund is one of the best performing hedge funds in 2011 with a 37.9% YTD return.
9. Steve Heinz – Lansdowne: Lansdowne’s European Long Only fund lost 4.9% during the first 12 days of August. The fund is down 10.1% YTD. Lansdowne’s UK Equity fund performed even worse. The fund lost 4.3% through August 12th and 15.8% YTD.
10. William von Mueffling – Cantillon: Cantillon’s Global Equity Fund lost 6.25% during the first 12 days of August. The fund is managed by Rob Cope and lost 3.6% YTD.
11. Joshua Friedman – Canyon Capital: Canyon’s global distressed security funds are up between 2% and 2.5% during the first 7 months of the year.
12. Edward Mule – Silver Point Capital: Silver Point Offshore fund lost 3.5% during the first half of August. The fund is still up 4.5% YTD.
13. John Bader – Halcyon: Halcyon Offshore Asset-Backed Value Fund is up 0.1% by the middle of the month. It is up 5.3% YTD.
14. Richard Perry – Perry Capital: Perry Partners Intl fund is down 5.5% by August 12th. The fund is also down 5.2% YTD.
15. Robert Karr – Joho Capital: Joho lost 3.5% during the first 12 days of 2011, yet the fund is up 1.7% YTD.
16. John Horseman – Horseman Capital: John Horseman’s Global Fund lost 8.5% during the first 17 days of August. The fnd is down 0.2% YTD.
17. Mark Kingdon – Kingdon Capital: Kingdon Offshore fund is down 9.3% during the first 12 days of August. The YTD return is even worse, -11.5%
18. Curtis Macnguyen – Ivory Capital: Ivory Capital’s Flagship Strategy lost 2.9% during the first 12 days of August. The fund lost 4.8% YTD.
19. Adam Weiss – Scout Capital: Scout Capital is down 2.5% during the first 12 days of August. The fund is up 0.9% YTD.
20. Michael Messner – Seminole: Messner’s Seminole Offshore fund lost 2.8% during the first 12 days of August. The fund is down 3.4% YTD.
21. Jacob Gottlieb – Visium Asset Management: Visium Institutional Partners Fund lost 1.6% by August 12th, the fund is down 0.6% YTD. Visium Balance Offshore fund is down 2.8% during the same time in August, and this fund is up 0.6% YTD.
22. Philippe Jabre – Jabre Capital: Jabcap Global Balanced Fund Ltd lost 1.8% during the first 8 days of August. The fund is down 19.9% YTD.
23. Glenn Dubin – Highbridge: Highbridge Long/Short Equity Fund lost 9.2% by the middle of the month, and it is down 11.2% YTD.
24. Andreas Halvorsen – Viking Global: Viking Global Equities was down 4.1% during the first 12 days of August, however, the fund is up 1.8% YTD.
Chase Coleman’s Tiger Global is up 30%, John Murphy’s Alydar is up 4.3%, Tom Claugus’ Bay Resources Partners Offshore fund is up 0.2%, Paul Tanico’s Castlerock is up 1.4%, Wayne Cooperman’s Cobalt Offshore is up 1.6%, Leon Cooperman’s Omega is up 4.5%, David Einhorn’s Greenlight Offshore is down 4.3% and Ricky Sandler’s Eminence is down 6.6% through the end of July.
Overall we can say that hedge fund performance in August isn’t as bad as the market. Year-to-date hedge fund returns are also much better than the S&P 500 index.