Tags: hedge | funds | loss | stocks

WSJ: Hedge Funds Hit the Skids in October

By    |   Tuesday, 21 October 2014 03:32 PM

This hasn't been a pretty month for financial markets, and as a result, it hasn't been a pretty month for hedge funds either.

They have suffered their worst losses since 2011 amid a surge of volatility in stocks, bonds, currencies and commodities, according to The Wall Street Journal.

Renowned hedge fund firms, such as Discovery Capital Management, Jana Partners and Paulson & Co. have suffered 5 to 11 percent losses, investors told the paper.

"It's a bloodbath out there. There are some awful numbers," Brad Alford, chief investment officer of money manager Alpha Capital Management, told The Journal. Some of the losses resulted from different funds rushing into and out of the same stocks at the same time, he said.

As of last Wednesday, when the S&P 500 index hit its low for the month, companies with the highest hedge-fund ownership were leading the drop, according to Bloomberg.

Stocks including Ally Financial and Zynga fell 100 percent more than other shares during the month through Oct. 15.

"Every hedge fund is trying to out-hedge the other, and as soon as they see a downward pullback in a sector like small- to mid-caps or energy, they're all getting out," Dan Neiman, a portfolio manager at Neiman Funds Management, told Bloomberg.

"They want to get out quick to avoid a down year, and that's not healthy for the environment. They create a lot of downward pressure on the market."

Hedge funds' mediocre performance and high fees in recent years have led pension funds to dump them or consider doing so.

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Finance
This hasn't been a pretty month for financial markets, and as a result, it hasn't been a pretty month for hedge funds either.
hedge, funds, loss, stocks
260
2014-32-21
Tuesday, 21 October 2014 03:32 PM
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