Bloomberg News

Paulson Drops as Hedge Funds Fall 0.4% in February

March 07, 2013

Hedge funds fell 0.4 percent last month, trailing global stocks, as funds including those at John Paulson’s Paulson & Co. and Ray Dalio’s Bridgewater Associates LP posted declines in February.

Multistrategy and macro managers decreased last month, while long-short equity hedge funds rose, according to data compiled by Bloomberg. Hedge funds that gained in February include Steven A. Cohen’s SAC Capital Advisors LP and Renaissance Technologies LLC, founded by Jim Simons. Hedge funds on average rose 1.5 percent this year.

The MSCI All-Country World Index, which has beaten the $2.25 trillion hedge-fund industry in five of the past seven years, rose less than 0.1 percent in February, including dividends, as markets swung between concern and optimism about economic growth. Stocks worldwide fell on Feb. 25, when the Italian election stalemate reignited worries about Europe’s debt crisis. The Dow Jones Industrial Average climbed to the highest level in five years just two days later on better-than-estimated housing data, before hitting a record in March.

“Most strategies were up but dragged down by macro (BBHFMCRO) and multistrategy,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based firm that advises hedge funds and investors. “The economic readings continued to be positive, especially in the housing market. The economic information out of Europe was not as good as the U.S.”

The Bloomberg Hedge Funds Aggregate Index is down 10 percent from its July 2007 peak. The main Bloomberg hedge fund index is weighted by market capitalization and tracks 1,264 funds, 2,763 of which have reported returns for February. The index, with annual data dating to 2006, has fallen short of the MSCI benchmark each year except for 2008 and 2011.

Paulson, Bridgewater

Long-short equity funds, whose managers can bet on and against stocks, rose 0.3 percent in February, bringing yearly gains to 2.3 percent. Multistrategy (BBHFMLTI) funds fell 0.6 percent last month and gained 0.8 percent this year. Macro funds, whose managers make investment decisions based on their reading of economic and political events, declined 1.2 percent in February, paring returns in 2013 to 0.1 percent.

Paulson posted an 18 percent decline in his Gold Fund last month as a slump in the metal, after more than a decade of gains, undermined efforts by the billionaire hedge-fund manager to rebound from two years of losses in some strategies.

The $900 million Gold Fund, which invests in bullion- related equities and derivatives, is down 26 percent this year, Paulson & Co. said yesterday in a client update obtained by Bloomberg News. The $18 billion firm’s Advantage funds also fell in February, while its dollar-denominated Recovery, Credit and Merger funds posted gains. All of the gold share classes of the funds declined.

SAC, Renaissance

Bridgewater Associates’ Pure Alpha II fund fell 2.6 percent last month through Feb. 27 and 2.4 percent this year, according to a person familiar with the matter. Dalio’s Westport, Connecticut-based firm manages $140 billion in assets.

Cohen’s SAC Capital International increased 0.9 percent last month, bringing gains in the first two months of 2013 to 3.4 percent, said a person with knowledge of the matter who asked not to be identified because the information isn’t public. The fund is run by SAC Capital Advisors, the $15 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.

Renaissance Technologies, the $22 billion East Setauket, New York-based hedge fund, posted a 2.2 percent February gain in its Renaissance Institutional Diversified Alpha Fund, bringing yearly returns to 4.5 percent, according to a person familiar with the matter. The Renaissance Institutional Equities Fund, advanced 2.3 percent last month and 7 percent this year, said the person, who asked not to be identified because the returns are private.

Hutchin Hill

Hutchin Hill Capital LP, the $1.1 billion hedge fund founded by Neil Chriss, posted a 2 percent advance in February in its Hutchin Hill Diversified Alpha Master Fund, bringing yearly gains to 4.9 percent, according to a person familiar with the matter.

Och-Ziff Capital Management Group LLC (OZM:US), the New York-based hedge fund run by Daniel Och, posted a 0.4 percent February gain in its OZ Master Fund, bringing its yearly return to 2.8 percent, the firm said in a regulatory filing. The OZ Europe Master Fund advanced 0.3 percent last month and 3.7 percent in 2013. The OZ Asia Master Fund climbed 0.4 percent in February and 4.1 percent this year. Och-Ziff had about $34.6 billion in assets as of March 1, a $1.5 billion increase from a month earlier, the firm said in the filing.

Tudor’s Returns

Tudor Investment Corp., the $12.1 billion global macro hedge fund founded by Paul Tudor Jones, rose 1 percent last month through Feb. 22 in its Tudor Global Fund, bringing yearly gains to 5.3 percent, according to a person familiar with the matter.

Pine River Capital Management LP, the $12.8 billion firm based in Minnetonka, Minnesota, posted a 0.3 percent return in its Pine River Fixed Income Fund run by Steve Kuhn, bringing yearly gains to 6.1 percent, according to an e-mail to clients, a copy of which was obtained by Bloomberg News. The Pine River Fund run by Aaron Yeary climbed 0.8 percent in February and 5.4 percent in 2013, the firm said in a separate e-mail.

Hedge-fund assets grew 2.8 percent to a record in the fourth quarter, according to Chicago-based Hedge Fund Research Inc. Investors deposited $3.4 billion during the period, the firm said in January.

Spokesmen for the firms declined to comment on the returns.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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