These Hedge Funds May Be Blowing Up Right Now

Insider Monkey tracks more than 300 hedge funds and a few mutual funds. We believe investors can beat the index funds by imitating best hedge funds’ best stock picks. We also try to avoid the funds that are nothing more than levered beta play. That’s why we like to measure the returns of hedge funds especially when the markets are in free fall.  Our methodology limits its analysis to Russell 3000 constituents and excludes put options and bond holdings. These calculations are based on Q1 filings. Q2 filings will be available next week. We will cover these filings as they become available. As always the data and our analysis will be made available for FREE.

S&P 500 index lost 16.6% since July 22nd and we will be using this as our benchmark. We present returns for those funds with the worst returns. Some of these hedge funds may be blowing up right now if they aren’t properly hedged:

1. Warren Lichtenstein – Steel Partners: Warren Lichtenstein’s largest position, Handy & Harman (HNH), is down 42.9% since July 22nd. This position is more than 3 times bigger than his second largest position, Gencorp (GY). Gencorp lost 26.6%. Lichtenstein 13F portfolio lost around 36% in just two weeks.

2. Mark Rachesky – MHR Fund Management: Mark Rachesky’s largest position, Loral Space & Comm (LORL), is down 27.7% since July 22nd. His loss in Leap Wireless is also more than 57%, or nearly $140 Million. Overall we estimate Rachesky’s 13F portfolio loss to be around 31%.

There are several other hedge funds with estimated losses around 25-30%. If you are interested in getting this list just send us an email. Here are some of the famous hedge funds that are getting hammered:


3. John Burbank – Passport Capital: John Burbank was bearish about the market and thought it was likely to decline. That’s why he said he increased his cash reserves. Unfortunately his stock positions didn’t do well during the past couple of weeks. We estimate Burbank’s 13F portfolio’s loss at 26%.

4. T. Boone Pickens – BP Capital: When energy prices go down, Boone Pickens energy hedge fund goes down. Pickens’ 13F portfolio probably lost around 26% during the past two weeks.

5. Eric Sprott – Sprott Asset Management: Gold and silver are doing OK but Sprott’s mining stocks aren’t. We estimate his 13F portfolio’s losses at around 25%

6. Bruce Berkowitz – Fairholme: Berkowitz’s financial stocks are killing him. Yesterday we covered his losses in Bank of America. We estimate his losses at around 24%.

7. John Paulson – Paulson & Co: Paulson has been hammered by the decline in his financial bets. He lost around $1.6 Billion yesterday. We estimate John Paulson’s 13F portfolio losses at around 24%.

8. David Tepper – Appaloosa: David Tepper said he reduced his financials bets significantly. We estimate his losses at around 23% based on his end of March holdings.

9. Dan Loeb – Third Point: It is a good thing that Dan Loeb reduced his gross exposure to low the 20s. His 13F portfolio lost around 23%. His actual losses are probably much lower than this.

10. Seth Klarman – Baupost: Seth Klarman is a cautious investor and he invests only a small percentage of his funds in the stock market. Unfortunately his 13F stock picks underperformed the market by around 7 percentage points during the past 2 weeks.