(Bloomberg) — A lot for a peaceful 2021. January kicked off with chaotic markets as Reddit-inspired retail traders banded collectively to spark a rally in beleaguered shares that had been among the many most-shorted in hedge fund land.
Now, particulars of the harm are coming in. Melvin Capital Administration took the most important identified hit to date, sinking 53% after its aggressive and leveraged quick on GameStop Corp. Maplelane Capital fell 45% by means of Jan. 27, Bloomberg reported. Different funds have been dragged down by the ensuing broader market havoc, whereas some corporations managed to earn a living.
In the meantime, the S&P 500 fell 1.1% final month.
Multi-strats largely sidestep market’s chaosEinhorn’s Greenlight dropped 11.1% final monthFiszel’s Honeycomb fell 4% in JanuaryRenaissance’s RIEF fund slumped 9.5% final month
Multi-Technique Funds Principally Sidestep Market Chaos
Multi-strategy hedge funds together with ExodusPoint Capital, UBS O’Connor and Verition Group made cash in January’s chaos, in line with individuals briefed on the returns, as diversification helped defend them from volatility within the U.S. fairness markets.
Michael Gelband’s $13.5 billion ExodusPoint rose 1.2% within the month, following a 13.5% return final yr.
UBS O’Connor’s $2.8 billion multi-strategy fund rose 4.7% final month. The fund, which had little capital in U.S. shares, made cash in Chinese language and European securities, and its world credit score investments had been additionally worthwhile. The fund climbed 39% final yr.
The $3 billion Verition, based by Nick Maounis, rose 1.2% in January. It scored positive aspects on event-driven, credit score, convertible bonds and long-short fairness trades. Its quant portfolio was the one technique that misplaced cash. Final yr the fund gained about 30%.
Schonfeld Strategic Advisors’s Strategic Companions fund, which invests throughout quant, equities and tactical buying and selling methods, rose 0.9% in January, in line with one other individual. Its Elementary Fairness fund, which invests within the agency’s tactical buying and selling technique in addition to human-run bottoms-up inventory buying and selling, fell 0.25% final month.
Some multi-strategy funds posted losses.
Citadel’s hedge funds misplaced 3% through the month, Bloomberg reported beforehand, with about one-third of the drop coming from its funding in Melvin Capital. The funds, together with founder Ken Griffin and different parters on the agency, invested $2 billion in Melvin because it moved to reposition its portfolio.
Representatives of the corporations declined to remark.
Einhorn’s Greenlight Misplaced 11.1% (2:46 p.m. NY)
David Einhorn’s Greenlight Capital began 2021 with a lack of 11.1%, greater than erasing final yr’s acquire.
Greenlight’s fund rose 5.2% in 2020, after a surge late within the yr introduced the fund into optimistic territory.
Einhorn, a price investor, has been ready for years for his stock-picking model to return to favor. After just a few months of optimistic efficiency, development shares once more did higher than their worth brethren in January.
Homebuilder Inexperienced Brick Companions Inc., the principle driver of Einhorn’s positive aspects final yr, fell 13.3% final month. And a so-called bubble basket of shares the supervisor shorted late final yr could have additionally weighed on efficiency. Whereas the Nasdaq Composite Index was up barely on the month, Tesla Inc., considered one of his most publicized quick wagers, rose 12.5%.
A spokesman for the agency declined to remark.
Einhorn’s efficiency was earlier reported by Institutional Investor.
Fiszel’s Honeycomb Hedge Fund Fell 4% (12:36 p.m. NY)
David Fiszel’s $1.2 billion Honeycomb Asset Administration misplaced about 4% final month, in line with individuals with data of the matter. That follows a acquire of 58% for the Grasp Fund in 2020.
The fund wagers on and towards shares and likewise makes choose non-public investments. Honeycomb has mentioned with traders launching a long-only fund this yr, the individuals mentioned.
A spokeswoman for New York-based Honeycomb, which was based in 2016, declined to remark.
Renaissance Quant Fund Slumps 9.5% (10:36 a.m. NY)
A Renaissance Applied sciences inventory fund slumped in January, including to the quant-investment big’s woes after it suffered heavy losses in pandemic-hit markets.
The Renaissance Institutional Equities Fund fell 9.5% within the month, in line with individuals with data of the matter, who requested to not be recognized as a result of the data is non-public. That follows a 20% loss final yr for the fund, which is the biggest of three that the agency sells to outdoors traders.
A spokesman for the East Setauket, New York-based agency based by billionaire mathematician Jim Simons declined to remark.
The setback for one of many trade’s best-known hedge fund corporations underscores the continued troubles for quant corporations. Their buying and selling fashions had been thrown off by market swings as Covid-19 battered the worldwide financial system and central banks unleashed unprecedented stimulus to include the carnage.
Renaissance, which oversees $60 billion, has dropped out of a rating of the world’s 20 most-profitable hedge fund corporations after a few of its public funds fell greater than 30% final yr. It’s not clear what prompted the Institutional Equities Fund’s January loss, which compares with a 1% drop within the S&P 500 index.
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Renaissance is greatest identified for its Medallion fund, which is open solely to workers and has annualized positive aspects of roughly 40% over the previous three many years. Whereas Medallion employs a short-term buying and selling technique, the Institutional Equities Fund tends to carry its inventory positions for weeks or months, trades solely U.S.-listed shares and is biased towards shares its fashions count on to rise.
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