Large Hedge Funds Weave Through Volatility

Many of the largest, high-profile hedge funds lagged the broader market in October. Several of them are even behind for the year. And their investors think this is just fine.

As most new money flowing into hedge funds these days has been headed for the largest funds — a trend we have chronicled in the past — those investors are seeking the comfort of relatively stable organizations that, for the most part, are not swinging for the fences.

So, for example, Stevie Cohen’s SAC Capital was up 1.8 percent in October compared with between 3 percent and 4 percent for the S&P 500 and Dow Industrials and nearly 6 percent for the Nasdaq Composite. He also lagged the market’s ferocious September rally.

Not to worry. For the year Cohen, who has kept his net exposure low for most of the time, is up more than 10 percent, say investors. His strategy also enabled him to make money in August when the markets were down.

For the first 10 months, the S&P 500 and Dow are up between 6 percent and 7 percent while the Nasdaq is up 10.5 percent.

Izzy Englander’s Millennium Partners was only up about 1.6 percent in October, but he is up more than 9 percent for the year through October.

Louis Bacon’s Moore Macro Managers was up slightly less than 1 percent in October, putting it up 7.5 percent for the year.

Ken Griffin’s Citadel gained just 2 percent in October and 6 percent to 7 percent for the year. Citadel is said to have fared especially well in convertibles, interest rates and equities.

Although King Street Capital was only up about 50 basis points in October and 4 percent for the year, one satisfied investor stresses the fund has a lot of cash and is “waiting it out.” Its short book is said to be smaller than it has been in the past and its Sharpe ratio is very high. Remember, the fund made money in 2008 when most others were in the red.

D.E. Shaw’s Composite Fund was up a little less than 3 percent in October, which finally put it into the black for the year, albeit by less than 1 percent. Shaw’s Oculus fund is said to be up 8 percent this year.

Another fund that broke into the black in October was Andreas Halvorsen’s Viking Global, which climbed 2.4 percent for the month and is now up more than 1 percent for the year.

Dan Och’s OZ Master Fund was up 2.34 percent in October and 6.7 percent for the year. His other funds are doing better.

OZ Asia Master fund is up 9 percent for the year while OZ Global Special Investments Master Fund L.P. is up 10.5 percent year-to-date.

Chase Coleman is also finally surging again after lagging the markets for a few years. His Tiger Global rose 2.3 percent in October and is now up 12.5 percent for the year.

Some funds are already turning in spectacular years. Michael Hintze’s CQS Directional Opportunities made more than 4.6 percent in October and is now up 27.5 percent for the year.