Hedge Fund Trends

The hedge fund sector remains dynamic, adapting continuously to market shifts and investor demands. Lately, there’s been a discernible trend towards diversification in investment strategies. Hedge funds are progressively delving into alternative assets and novel methodologies, moving beyond conventional markets.

BH Digital Cryptocurrency Fund Thrives, Outshining Firm’s Macro Trading Losses

In the first three months of the year, BH Digital, the cryptocurrency fund of Brevan Howard Asset Management, has shown an incredibly good performance, soaring by 34.5% by January, and in March 2022 has nearly reached the figure of 51%. This great performance is in contrast with the firm’s losses in its macro trades during the same period.

The high increase in BH Digital prosperity is related to the hike in cryptocurrency values, Bitcoin being an exception here, whereby its value has risen by almost fifty percent since the close of Q1 2022 to Q1 2024. The fund’s investment strategy includes liquid cryptocurrencies, relative-value opportunities, and venture capital in the cryptocurrency space. Last year, the fund gained 44%, rebounding from losses in 2022.

Last year, the fund gained 44%, rebounding from losses in 2022. However, Brevan Howard’s macro trades weren’t as profitable in 2024. Despite reducing losses last month, primarily due to incorrect interest rate bets made earlier in the year, the firm’s flagship $12 billion Master Fund remains down approximately 2% year-to-date. This performance contrasts with the 6% gain seen in the Bloomberg Macro Hedge Fund Index.

This information is based on the article analyzed and reported by ThePlatform’s analyst team: https://www.hedgeweek.com/brevan-howards-crypto-fund-up-35-in-q1/

L1 Capital’s Catalyst Fund: Activism Driving Double Returns in Australian Market

One of Australia’s leading activist hedge funds, L1 Capital’s Catalyst Fund, overseen by former Macquarie Group Ltd. investment banker James Hawkins, has been achieving returns nearly double that of the country’s benchmark stock index since its inception in 2021. With a focus on around ten stocks, totaling A$1.7 billion ($1.1 billion), the fund seeks to drive changes within the companies it invests in, including boardroom restructuring and dividend increases. In a market where activism hasn’t traditionally been prominent, L1 Capital’s emphasis on activism is proving fruitful, drawing interest from various stakeholders, including billionaire founders and pension funds. According to Hawkins, activism in Australia has evolved from being stigmatized to being accepted and now valued.

The Catalyst Fund has significantly owned and controlled the ultimate success of such big-stakes for example urging the break-up of Santos Ltd., the Australian gas producer which materialized discussions of a merger with Woodside Energy Group Ltd.

Another notable success was identifying hidden value in New Zealand gas station operator Z Energy’s refinery operations before its acquisition by Ampol Ltd.

Besides takeovers, the Catalyst Fund additionally concentrates on other change avenues, namely board member replacement, expense reduction, and increased dividend payouts.

Since its beginning, in July 2021, the fund has delivered a 42% return, outperforming the S&P/ASX 200 Index, which returned 22% over the same period. The fund charges a management fee of 1.28% per annum and a performance fee of 20.5% over the benchmark.

This information is based on the article analyzed and reported by ThePlatform’s analysts team: https://www.bloomberg.com/news/articles/2024-04-11/ex-macquarie-banker-s-activist-hedge-fund-strategy-soars-42

Millennium Management Faces Losses, Liquidates Altice Positions Managed by Jason Feasey

Millennium Management, a major multi-strategy firm, is reportedly liquidating positions managed by Portfolio Manager Jason Feasey following losses incurred from bets on the telecom network Altice. Feasey, along with his team, managed approximately $750 million for Millennium. Their bets were focused on Altice’s extensive debt complex. However, when Altice informed creditors last month about the necessity of accepting haircuts to meet leverage targets, these positions quickly turned against Feasey.

Feasey, recognized as one of Europe’s prominent credit derivatives traders, now joins a growing list of credit managers encountering challenges at multi-strategy firms. These firms typically enforce strict risk limits and often restrict traders from adjusting their positions, opting instead to cut assets once losses reach a certain threshold.

Before joining Millennium, Feasey managed funds for notable firms such as Chris Rokos, Michael Platt’s BlueCrest Capital Management, and Brevan Howard Asset Management.

This information is based on the article analyzed and reported by ThePlatform’s analysts team: https://www.hedgeweek.com/altice-losses-prompt-millennium-to-liquidate-feasey-credit-trades/

Antara Capital Halts Withdrawals Amidst Losses: Side Pocketing Illiquid Assets in Response to Market Challenges

Antara Capital, a hedge fund with $1.3 billion in assets supported by Blackstone Inc., recently suspended withdrawals from its less liquid assets due to significant losses. Investments in illiquid private assets were held back from redemption requests and placed into a separate account, known as a side pocket, in February. This decision followed two consecutive years of declining returns for the firm, primarily driven by the performance of these investments. According to sources familiar with the matter, the main fund experienced a 14% decline in 2022 and an estimated 18% loss in 2023. However, excluding the private investments, the fund would have reported gains for 2023. Over 80% of investors agreed to the establishment of the side pocket. Antara Capital, founded by Himanshu Gulati, formerly involved in distressed credit business at Man GLG, started trading in 2018. Despite recent losses, long-term investors in Antara have seen gains of over 50%.

In 2021, Gulati partnered with former Yankees star Alex Rodriguez’s investment firm, ARod Corp., to create a special-purpose acquisition vehicle focusing on various sectors. Side pockets emerged during the 2008 financial crisis to help hedge funds manage illiquid assets. While most of these side pockets have been resolved, some can persist for longer than expected.

This information is based on the article analyzed and reported by ThePlatform’s analysts team: https://www.bloomberg.com/news/articles/2024-04-08/blackstone-backed-hedge-fund-antara-freezes-illiquid-assets

Bluebell Capital Targets BlackRock, Calls for Removal of Larry Fink as Chairman

According to a report in the Wall Street Journal, the American Bluebell Capital Partners, an activist hedge fund based in London, recently targeted BlackRock, requesting the removal of Larry Fink, the company’s Founder, from his position of Chairman of the company.

In the report, BlackRock is also mentioned as having filed a proxy statement with the Securities and Exchange Commission along with Bluebell’s proposal for a shareholder resolution. The resolution seeks to amend BlackRock’s bylaws, requiring Fink, currently serving as Chairman, to transition to an Independent Director, thereby enhancing accountability and oversight.

Among the issues that Bluebell faces is the task of motivating most of the significant asset-management peers of BlackRock to cast their votes in opposition to the board’s recommendation. Nevertheless, its BlackRock company stock holdings are very limited, perhaps accounting for under 0.01% of its $120 billion market cap.

In its presentation to shareholders, Bluebell argues that BlackRock’s 17-member board lacks independence and is too large to effectively oversee Fink. The hedge fund highlights “numerous contradictions and inconsistencies” between BlackRock’s stated ESG strategy and its implementation. However, Bluebell clarified that its proposal isn’t a vote of no confidence in Fink.

In reply, BlackRock’s proxy issuing calls attention to the relevance of the proposal but asserts that their shareholders will benefit most from it. BlackRock’s response indicates that “The board concluded, as it did this year, that Mr. Fink undertaking the role of both BlackRock’s Chairman and CEO is efficient and appropriate leadership framework.”  BlackRock also points out that the performance of its shares over the past 24 years under Fink’s leadership totaled 9,000%.

This information is based on the article analyzed and reported by ThePlatform’s analysts team: https://www.hedgeweek.com/activist-hedge-fund-bluebell-challenges-blackrocks-leadership/

Hedge Fund Performance in Q1: Mixed Results as Stock-Pickers Struggle to Keep Pace with Market Indices

In the first quarter, stock-picking hedge funds displayed strong growth; they were, however, less effective compared with the market indices. PivotalPath’s Sector Index shows that these funds managed to gain 7.9%, while the S&P 500 and Nasdaq Composite Index ended with 10.6% and 9.3%.
Furthermore, among famous equity hedge fund managers, there was a trend of underperformance manifested by, for example, Renaissance Technologies, Greenlight Capital, and Pershing Square Capital Management. Furthermore, Viking Global Investors, Coatue Management, and Tiger Global Management, which belong to the group of tech-focused firms, also did not succeed in matching the market benchmarks.
Among the stock-pickers that outperformed, this was largely achieved by investments in this selection of companies: Nvidia Corp., Amazon.com Inc., and Meta Platforms Inc. Bloomberg Magnificent 7 Index shows this very clearly. Investors often seek hedge funds for returns that are independent of market trends or stem from less conventional trades. According to Jon Caplis, founder of PivotalPath, the overall equity performance this year has been modest, with gains primarily driven by large tech stocks. While some hedge funds reduced their exposure to equities during the stock market turmoil in 2022, many have been slow to restore typical levels, especially tech-focused funds. Although the average tech fund increased its Nasdaq exposure by 37% — the highest since May 2022 — it remains below peak levels seen at the start of that year. Light Street Capital Management and Whale Rock Capital Management stood out with impressive returns of over 35% and more than 22%, respectively, in the first quarter. Nvidia was a significant holding for Light Street, while Whale Rock favored Microsoft Corp., Meta, Amazon, and Nvidia, according to regulatory filings. These four stocks alone contributed over 46% of the S&P 500’s gain in the first quarter.

This information is based on the article analyzed and reported by ThePlatform’s analysts team: https://www.bloomberg.com/news/articles/2024-04-10/equity-hedge-funds-fail-to-beat-benchmarks-despite-tech-boost

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