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Tags: Hedge | Funds | Worst | Month

Hedge Funds Have Worst Month Since September as Paulson Declines

Wednesday, 06 June 2012 05:20 PM EDT

Hedge funds fell 2.9 percent in May, their worst month since September, as stocks slumped on concern Greece may exit the euro and the global economy is weakening.

The decline was driven by long-short equity, multistrategy and global macro funds, according to data compiled by Bloomberg. Hedge funds have lost 1.3 percent since the start of the year, trailing a 0.9 percent gain for equities worldwide, including reinvested dividends.

“It’s very hard for hedge funds across the board to generate positive returns if equities around the world are selling off significantly, the dollar is strengthening, commodities are selling off significantly,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based firm that advises hedge funds and investors. “It’s definitely the worst month in absolute returns for hedge funds in 2012.”

Funds including John Paulson’s Paulson & Co. and William Ackman’s Pershing Square Capital Management LP slumped in May as the MSCI All-Country World Index sank 8.9 percent, including dividends. U.S. employers added fewer jobs than forecast, the American service sector slowed and euro-region unemployment rose to a 15-year high.

Paulson Funds

Paulson, the billionaire hedge-fund manager seeking to reverse record losses in 2011, posted a 13 percent decline last month in his gold fund as bullion and mining stocks fell, a person briefed on the returns said today. The loss leaves the $1.2 billion fund, which can buy derivatives and other gold- related investments, down 23 percent this year.

Paulson & Co., which manages about $24 billion, posted losses during May in its Advantage funds, Recovery Fund and Partners Enhanced fund. Paulson’s Credit Opportunities Fund rose 0.9 percent last month and 5.3 percent in 2012.

Multistrategy hedge funds fell 3.9 percent in May and 3.2 percent this year, according to the Bloomberg index. Long-short equity funds, whose managers can bet on rising and falling stocks, declined 3.2 percent last month and 0.2 percent in 2012.

Kingdon Capital, the $2.7 billion hedge fund run by Mark Kingdon in New York, posted a 4.5 percent decline last month in Kingdon Associates, a global long-short equity fund, reducing year-to-date gains to 6.6 percent, according to an update to investors dated May that was obtained by Bloomberg News. Patrick Clifford, a spokesman for Kingdon Capital, declined to comment on the returns.

Macro funds, which bet on global economic trends, slumped 2.5 percent last month and 0.9 percent in the first five months of the year.

Pershing Square

The main Bloomberg hedge fund index is weighted by market capitalization and tracks 2,718 funds, 1,236 of which have reported returns for May. The index is down 14 percent from its July 2007 peak.

Pershing Square Capital Management LP, the $10.5 billion hedge fund run by Ackman, who is known for investing in companies to press for changes, slumped 7.1 percent in May in its $6 billion Pershing Square International Ltd. fund, paring yearly gains to 2.4 percent this year, according to a monthly performance update to investors that was obtained by Bloomberg News. Pershing Square, based in New York, declined to comment on the returns.

Quantitative Investment Management LLC, the $4.6 billion Charlottesville, Virginia-based managed futures fund by Jaffray Woodriff, posted a 7.2 percent May advance in its QIM Global fund, bringing yearly gains to 8 percent, according to a person briefed on the returns, who asked not to be identified because the information is private. QIM Tactical Aggressive, the firm’s long/short equity futures strategy, rose 5.9 percent last month and 3.9 percent in 2012. Mary Beth Grover, a spokeswoman for QIM, declined to comment on the returns.

© Copyright 2023 Bloomberg News. All rights reserved.

Wednesday, 06 June 2012 05:20 PM
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