Hedge Funds That Returned 20% Show All Is Not Lost
As the dust settles on a troubled year for hedge funds, some managers escaped the wreckage and even thrived.
SoMa Equity Partners, a $1.2 billion long-short equity fund, rose about 20 percent in 2018, according to an investor document seen by Bloomberg. The $1.5 billionCadian Capital Management notched a similar gain, according to a person familiar with the matter. AndLuxor Capital Group, a $3.2 billion event-driven fund, posted a robust return as well, another person said.
These funds were bright spots in an otherwise bleak year for the industry. Hedge funds on average lost 6.7 percent, according to the HFRX Global Hedge Fund Index, more than the S&P 500 Index with reinvested dividends. The managers who came out on top made smart bets on media, technology and energy companies and benefited from short positions in Europe and Asia.
SoMa Equity made money on small-cap firms likeCoupa Software Inc. andCyberArk Software Ltd. At mid-year, SoMa reduced its exposure to high-growth names in software and pivoted toward media and telecom. Cadian Capital benefited from long wagers on IAC/InterActiveCorp,Tableau Software Inc. andPalo Alto Networks Inc., while Luxor Capital won in December with short positions in European and Japanese credit as well as tech stocks.
While some of the biggest names in the business like David Einhorn and Dan Loeb posted their worst performance in many years, a number of nimble smaller funds had cause to celebrate. The $53 million Crescat Capital climbed 40.5 percent in its global macro hedge fund and 32 percent in its long-short hedge fund as its short China wager came to fruition, according to aninvestor document. AndRiposte Capital, a $100 million equity long-short firm, jumped 15 percent in its global opportunity fund, benefiting from positions in the energy sector.
“Chinese equity shorts in both funds and our China currency short in the global macro fund were big contributors to performance in 2018,” said Kevin Smith, founder of Crescat. “We also profited significantly from short positions in overvalued U.S. equities and from a nascent rise in deeply undervalued precious metals in the fourth quarter.”
Representatives for the hedge funds declined to comment or didn’t return emails.
Here’s a list of some winners and losers in 2018:
2018 Return (%)
|Crescat Global Macro||40.5||Macro|
|Crescat Long/Short||32.1||L/S Equity|
|SoMa Partners||20||L/S Equity|
|Riposte Global Opportunity||15||L/S Equity|
|Luxor Capital Partners Offshore||13.6||Event-driven|
|Renaissance Institutional Equities||8.5||Equity|
|Heard Opportunity||8||L/S Equity|
|KL Special Opportunities||6.7||Event-driven|
|Honeycomb Master||5.2||L/S Equity|
|Marshall Wace Eureka||0.6||L/S Equity|
|Pershing Square Holdings||-0.7||Activist|
|Coatue Qualified||-1.2||L/S Equity|
|Third Point Offshore||-11||Event-driven|
|Greenlight Capital||-34||L/S Equity|
Sources: Bloomberg reporting
— With assistance by Simone Foxman, Katherine Burton, and Nishant Kumar
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