Hedge funds trailed global stocks for the fifth time in seven years in 2012 after posting December gains amid a market rally fueled by optimism that President Barack Obama and Republicans would reach a U.S. budget deal.
The 0.6 percent December advance lifted last year’s return for the $2.19 trillion industry to 6.7 percent, according to data compiled by Bloomberg. Paul Tudor Jones, Louis Moore Bacon and Steven A. Cohen posted gains. Long-short funds were little changed, while macro funds fell and multistrategy managers rose.
The MSCI All-Country World Index (MXWD) climbed 2.3 percent in December with dividends, bringing yearly gains to 17 percent. The Standard & Poor’s 500 Index rallied 1.7 percent on Dec. 31 as negotiators worked on a deal averting more than $600 billion of revenue increases and spending cuts, known as the fiscal cliff. The House of Representatives approved a Senate bill on Jan. 1, protecting 99 percent of households from higher income taxes. The next day, Republicans and Democrats agreed on a compromise budget.
“It wasn’t until the 31st when the deal was announced that it was clear we were going higher,” said Wayne Yi, a senior analyst at SAIL Advisors Ltd., the $2 billion Hong Kong-based fund of funds. “With the fiscal cliff averted for the time being, there’s less fear of an economic recession.”
The Bloomberg Hedge Funds Aggregate Index (BBHFUNDS) is down 7.1 percent from its July 2007 peak. The main Bloomberg hedge fund index is weighted by market capitalization and tracks 2,743 funds, 1,296 of which have reported returns for December. The index, with annual data dating to 2006, has fallen short of the MSCI benchmark each year except for 2008 and 2011.
Long-short equity funds, whose managers can bet on and against stocks, declined less than 0.1 percent for the month and gained 4.4 percent in 2012.
Tremblant Capital LP, the $1.4 billion New York-based hedge fund founded by Brett Barakett, rose 1.6 percent in December and 16 percent last year in its Tremblant Partners Ltd. fund, according to a performance update obtained by Bloomberg News.
Macro funds, which make investment decisions based on their reading of economic and political events, fell 0.6 percent last month and 2 percent last year.
Tudor Investment Corp., the $11.6 billion hedge fund run by Jones in Greenwich, Connecticut, advanced 2.7 percent in December and 6.3 percent last year, according to a person familiar with the matter, who asked not to be named because the information isn’t public.
Moore Capital Management LLC, the $13.5 billion fund in New York overseen by Bacon, climbed 1 percent in December in its Moore Global Investments fund, bringing gains in 2012 to 5 percent, the person said. The firm’s Moore Macro Managers fund rose 1.3 percent last month and 6.4 percent last year.
Multistrategy funds returned 0.2 percent in December and fell 4.8 percent in 2012.
Senator Investment Group LP’s Senator Global Opportunity Fund gained 2.4 percent in December and 14 percent last year, according to a person familiar with the matter. The New York- based firm, which manages $4.2 billion, is run by Alex Klabin and Doug Silverman.
Cohen’s SAC Capital International increased 0.9 percent last month through Dec. 21 and 12 percent last year, according to a person with knowledge of the matter. The fund is run by SAC Capital Advisors LP, the $14 billion Stamford, Connecticut-based firm that was notified in November by the U.S. Securities and Exchange Commission that it may be sued for insider-trading fraud.
Carlson Capital LP’s Double Black Diamond fund advanced 1.4 percent last month and 12 percent in 2012, a person familiar with the matter said. The firm, based in Dallas, manages $6.3 billion and is run by Clint Carlson.
Citadel LLC, the $14 billion Chicago-based firm founded by Ken Griffin, rose 3.4 percent in December and 26 percent this year in its main funds, Kensington and Wellington, according to a person familiar with the matter.
Among activist managers, Christopher Cooper-Hohn’s $8.5 billion London-based Children’s Investment Fund Management LLP climbed 4.5 percent in December and 30 percent in 2012, said a person briefed on the performance.
Jana Partners LLC’s Jana Partners fund rose 1.5 percent last month and 23 percent in 2012, according to a performance update to investors, a copy of which was obtained by Bloomberg News. The $4 billion New York-based firm’s Jana Nirvana fund rose 2.3 percent in December and 33 percent last year, according to a person familiar with the matter. Barry Rosenstein is the firm’s managing partner and co-portfolio manager, along with David DiDomenico.
Hedge fund assets grew 3.6 percent to a record $2.19 trillion in the third quarter, according to Chicago-based Hedge Fund Research Inc. Investors deposited $10.6 billion during the period, the firm said in October.
Spokesmen for the firms declined to comment on the returns.
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