Hedge Funds Trail Stock Rally With 0.6% September Return

Hedge funds rose 0.6 percent last month, trailing a global stock rally after the European Central Bank announced specifics of its bond-buying plan and the U.S. Federal Reserve said it would buy mortgage-backed securities.

Multistrategy, global macro (BBHFMCRO) and long-short equity managers all rose. The MSCI All-Country World Index (MXWD) climbed 3.2 percent, including reinvested dividends, after ECB President Mario Draghi said policy makers agreed to an unlimited bond-purchase program and the Fed said it would expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month.

“Hedge funds trailed the major indices because the central banks are all intervening and forcing liquidity into the markets, and causing the general stock market to rally,” said Jay Rogers, president of Irvine, California-based Alpha Strategies Investment Consulting Inc., which advises family offices as well as hedge funds seeking to raise money.

The September increase brought hedge funds’ gains this year to 3.6 percent, compared with an advance of 13 percent for equities worldwide, including dividends.

The main Bloomberg hedge fund index is weighted by market capitalization and tracks 2,698 funds, 1,182 of which have reported returns for September. The index is down 9 percent from its July 2007 peak.

Photographer: Rick Maiman/Bloomberg

John Paulson, the billionaire manager coming off record losses in 2011, further pared declines in his Gold and Advantage funds last month, according to two people familiar with the matter. Close

John Paulson, the billionaire manager coming off record losses in 2011, further pared... Read More

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Photographer: Rick Maiman/Bloomberg

John Paulson, the billionaire manager coming off record losses in 2011, further pared declines in his Gold and Advantage funds last month, according to two people familiar with the matter.

Macro funds, which bet on economic trends, rose 0.3 percent in September and fell 0.5 percent in this year’s first nine months.

Multistrategy Funds

Multistrategy funds returned 0.3 percent last month and dropped 2.9 percent in 2012.

John Paulson, the billionaire manager coming off record losses in 2011, further pared declines in his Gold and Advantage funds last month, according to two people familiar with the matter. The Gold Fund, which can buy derivatives and other gold- related investments, rose 13 percent as bullion rallied, cutting losses this year to 3.9 percent. The Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, gained 3.6 percent last month, reducing losses since the start of the year to 14 percent.

Paulson & Co., which manages $20 billion, posted September losses in its Credit Opportunities and Recovery funds, reducing year-to-date gains to 2 percent and 0.5 percent, respectively, the people said. The Enhanced fund, which invests in shares of companies that are involved in mergers, didn’t make or lose money in September and is up 9.1 percent in 2012. All of the funds’ gold share classes posted advances last month, and each is up year-to-date except for the Advantage Plus fund. Investors can choose between gold-and dollar-denominated versions for most of New York-based Paulson & Co.’s funds.

Elliott International

Elliott Management Corp., the $21 billion New York-based hedge fund founded by billionaire investor Paul Singer, posted a 1.9 percent increase in its Elliott International Ltd. fund, its fourth straight positive month, according to an update sent to clients. The return lifted its 2012 gain to 8.4 percent.

Pine River Capital Management LP, the $10.3 billion multistrategy firm based in Minnetonka, Minnesota, posted a 2.3 percent increase last month in its Pine River Fund, which has $1.5 billion in assets and is run by Aaron Yeary, according to an e-mail to clients, a copy of which was obtained by Bloomberg News. The return brings this year’s gain to 16 percent. The firm’s assets include hedge funds, managed accounts and Two Harbors Investment Corp. (TWO), a mortgage real estate investment trust.

Third Point

Long-short equity funds, whose managers can bet on rising and falling stocks, climbed 0.3 percent last month and 1.9 percent in 2012, according to data compiled by Bloomberg.

Passport Capital LLC’s Passport Global fell 2.7 percent in September and rose 11 percent this year, according to a performance update obtained by Bloomberg News. The Passport Global Long Short fund fell 0.6 percent last month and gained 13 percent this year, according to a person familiar with the matter who asked not to be identified because the information isn’t public. The $3.4 billion San Francisco-based firm is run by John Burbank.

Highside Capital Management LP, the $1 billion Dallas-based global equity long-short hedge fund run by Lee Hobson, rose 1 percent in September and 11 percent this year, according to a person familiar with the matter.

Daniel Loeb’s $9.3 billion Third Point LLC, based in New York, posted a 3.4 percent September gain in its Third Point Offshore Fund Ltd., increasing its 2012 return to 11 percent, according to an Oct. 2 regulatory filing.

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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