This Changes Everything for Hedge Fund Managers (Institutional Investor)
A decade ago, Marc Lasry, CEO and co-founder of distressed investor Avenue Capital Group, described in stark terms the impact of record low interest rates on the investment world. He told Institutional Investor that when he started in the business, a target return of 8 to 12 percent was 2 or 3 times the risk-free rate. But with rates at record lows at the time — and until recently — the amount of risk that investors needed to take to earn that same return had skyrocketed. “If T-Bills are at 25 bps, you were literally taking 30 times the risk-free rate,” he said.
Is Michael Platt the Highest Earner in Finance? (The Washington Post)
For most investment managers, 2022 was a year to forget: It was “one of the most challenging market environments in over 50 years,” said Gary Shedlin, chief financial officer of BlackRock Inc. With equity and bond markets down, there were few places to hide; even hedge funds struggled, despite their ability to prosper from declining markets, falling an average 4.25%, according to industry data provider HFR. Yet one fund stood out. BlueCrest Capital, the firm co-founded by billionaire bond trader Michael Platt, reportedly posted a return of 153% in the year. The performance marks the latest in a table-topping run. If you’d invested $1,000 with Platt at the beginning of 2016, your investment would be worth almost $28,000 today, reflecting an annualized return of 60%.
These ‘Big Short’ Vets Were Up 169% Last Year (Institutional Investor)
As a portfolio manager working at FrontPoint, Porter Collins was one of the subjects of “The Big Short” – the book, and later movie, on the 2008 market crash. He likes to say he’s been looking for the next big short ever since. Last year, his Seawolf Master Fund found plenty of them — and ended the year up 168.6 percent.
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Hedge Funds that Punted Early on China Recovery Reaped the Rewards (Reuters)
Hedge funds that bet on a swift shift in the country’s zero-COVID and regulatory policies in late 2022 while the stock market was tumbling and political uncertainty was intense were rewarded handsomely, according to sources and fund documents. The MSCI China index (.dMICN00000PUS) plunged by 17% in October as President Xi Jinping consolidated power in a twice-in-a-decade Communist Party Congress and many investors worried Beijing would sacrifice economic growth for ideology.
Einhorn Heralds Value’s Return With Snark, Modesty (The Wall Street Journal)
After years spent mostly in the doghouse, hedge fund manager David Einhorn is sharing some clues about how his Greenlight Capital managed to outperform the S&P 500 last year by 51 percentage points after fees. In a letter to clients, the value maven reveals it was mainly his skepticism of bubbly stocks—and not his embrace of value—that shined. The fund got a return of 30% from its short bets, compared with 2.4% from its long bets.
