Klarman Made $1 Billion Hedging Markets. He Still Lost Money (Bloomberg)
Seth Klarman made $1 billion betting against stocks and corporate credit. That wasn’t enough to prevent his hedge fund from losing money last month. His successful hedges were offset by deeper losses in the portfolio and overall Klarman’s Baupost Group declined as much as 8% in March, according to a person familiar with the firm’s performance.
Hedge Fund Star Behind 4,000% Coronavirus Return Peers Into Crystal Ball (The Wall Street Journal)
Financial news outlets are full of predictions these days by investors who allegedly “called the coronavirus collapse” for what they think will happen next. A leaked client letter from a hedge fund star who made an absolute killing in the selloff promising a peek into his “magical crystal ball” is practically financial catnip. Mark Spitznagel could be forgiven some immodesty. His Universa Investments, which offers investors a tail-risk hedging strategy that serves as an insurance policy against extreme market events, made…
Cramer Says he and Hedge Fund Billionaire David Tepper are Confused by the Market’s Recent Rally (CNBC)
CNBC’s Jim Cramer said Wednesday that he and hedge fund billionaire David Tepper are not sure why the stock market has rallied in recent days while the coronavirus pandemic continues to upend daily life in the U.S. “I spoke to Dave Tepper yesterday and we were both kind of marveling, ‘Jeez it’s been bullish. Why?’” Cramer recalled on “Squawk on the Street.”
Chase Coleman’s Tiger Global Reveals Why it Likes TikTok Parent ByteDance Even More During the Coronavirus Pandemic (Business Insider)
Billionaire Chase Coleman‘s Tiger Global begins a recent letter to investors in his firm’s private equity fund by saying the $36 billion fund manager is “deeply sympathetic to the human toll this virus is taking.” It ends the letter, dated March 23, by reminding investors that some of the firm’s “most impactful” private investments were boosted by the 2008 housing crisis – such as Facebook, Flipkart, and JD — and that the SARS outbreak in 2003 created “an incredible backdrop for prospective returns.”
Appaloosa Partner Braves Marketing Trail (HFAlert.com)
Another former Appaloosa Management executive is striking out on his own. Aaron Weitman, both a nephew and protege of Appaloosa chief David Tepper, has penciled in July 1 to launch the debut fund from his CastleKnight Management. He is expected to start with at least $100 million, including an undisclosed contribution from Tepper. CastleKnight would employ event-driven and special-situations strategies, using fundamental analysis to invest across the debt and equity of a mix of companies. While Weitman was planning the offering before the coronavirus crisis began, that focus could position his New York firm to take advantage of growing demand from investors who see such vehicles as capable of performing well amid the market turmoil resulting from the pandemic.
Macro Hedge Fund Saw Strong Performance in March, Led by Macro CTA Strategies (Opalesque.com)
Laxman Pai, Opalesque Asia: Macro hedge fund saw strong performance in March, led by Macro CTA strategies, tracked by the HFRI Macro: Systematic Diversified Index, which was up 2.9% in March. The HFRI Macro (Total) Index gained +2.1 percent for the month, with significant contributions from quantitative, trend-following Macro CTA strategies. CTA gains were attributed to trading long and short positions across fixed income, equity, currencies, metals, and energy commodities. Discretionary Commodity and Currency Macro strategies also gained for the month, with the HFRI Macro: Commodity Index returning +3.1 percent, while the HFRI Macro: Currency Index added +2.9 percent. According to the report, fixed income-based Relative Value Arbitrage (RVA) strategies posted mixed gains in March on with long volatility exposures offsetting arbitrage spread widening.
Great Depression Is Closest Parallel to Pandemic, Warns Odey (Bloomberg)
The global economy is slipping into a “different era” as the devastation in industries from oil to services roils markets, hedge fund manager Crispin Odey cautioned his investors. “This is not like 2008-9, nor 2001-2, nor even 1989-92,” Odey wrote in a letter to clients seen by Bloomberg. “The fall in global gross national product for this year will echo 1931-2. That was a terrible time when countries and institutions disappeared and characters like Adolf Hitler seized their chance to take over Germany.”
Hedge Funds Down 4.40 per cent in March, Says Eurekahedge (Hedge Week)
Hedge fund managers were down 4.40 per cent in March, outperforming the MSCI AC World Index IMI (Local) by 9.59 per cent during the month – a level of outperformance unseen since October 2008. Long volatility-focused strategies, CTA/managed futures and AI hedge funds top the Q1 2020 league table, while equity long-biased hedge funds nurse losses of close to 20 per cent. On an asset-weighted basis, hedge funds were down 6.49 per cent in March, as captured by the Mizuho Eurekahedge Hedge Fund Index (USD). The index is currently down 8.95 per cent year-to-date. As of Q1 2020, the global hedge fund industry AUM has declined by almost USD110 billion based on preliminary estimates for March data.