Cohen Gains, Paulson Loses as Fiscal Policy Roils Markets
Steven A. Cohen and Ken Griffin posted gains in their hedge funds in November, a month marked by market volatility following the U.S. elections and fiscal policy talks in the U.S. and Europe. John Paulson lost money in most of his funds.
Cohen gained 1.1 percent in his SAC Capital International fund in November and the main funds of Griffin’s Citadel LLC rose 2 percent, according to people briefed on the returns who asked not to be named because the information is private. Paulson lost 6.5 percent last month in the Advantage Plus Fund and 12 percent in the Gold Fund, according to another person, as the price of gold fell.
The $2.2 trillion hedge funds industry climbed 0.2 percent in November, as stock markets fell following the re-election of U.S. President Barack Obama and the prospect of automatic spending cuts and tax increases set to be triggered in January, then reversed losses amid reports showing the housing market is improving. The MSCI All-Country World Index (MXWD) rose 1.3 percent last month and the Standard & Poor’s 500 Index of big U.S. stocks advanced 0.6 percent, besting hedge funds.
“As a result of the fiscal cliff situation, people got short,” said Peter Rup, chief investment officer at New York- based Artemis Wealth Advisors LLC, which oversees $570 million for high-net-worth families. “They got hurt when the market reversed itself.”
The Bloomberg Hedge Funds Aggregate Index is up 1.4 percent this year, though it’s still down 11 percent from its July 2007 peak. The main Bloomberg hedge fund index (BBHFUNDS) is weighted by market capitalization and tracks 2,768 funds, 1,257 of which have reported returns for November.
Event-driven (BBHFMERG) merger arbitrage funds, or those that try to predict triggers for stocks and bonds such as corporate restructurings, acquisitions, management changes and share sales, climbed 0.4 percent last month and 2 percent this year.
Macro (BBHFMCRO) funds, which make investment decisions based on their reading of economic and political events, fell 0.5 percent last month and 1.4 percent in this year’s first 11 months.
Losses at Paulson’s $19 billion Paulson & Co. left the Advantage Plus fund down 22 percent this year. The Gold fund has lost 21 percent since the start of 2012, according to the person. The Recovery Fund, which invests in assets Paulson believes will benefit from a long-term economic rebound such as financial services, hotels and real estate companies, fell 2.3 percent last month and rose 0.2 percent in 2012.
Gold fell to a four-week low on Dec. 5 as Goldman Sachs Group Inc. said the metal’s longest winning streak in at least nine decades will peak next year amid accelerating U.S. growth.
Paulson’s credit and merger-arbitrage strategies gained. Paulson Partners Enhanced, which invests in the shares of companies that are involved in mergers, rose 2.5 percent in November and 12 percent this year. Paulson’s Credit Opportunities Fund rose 0.1 percent in November and 5.6 percent this year.
Armel Leslie, a spokesman for Paulson & Co., declined to comment on the returns.
Moore Capital Management LLC, the $13.5 billion fund in New York run by Louis Moore Bacon, fell 0.1 percent in November in its Moore Global Investments fund, paring gains this year to 4.1 percent, according to a person briefed on the returns. The firm’s Moore Macro Managers fund rose 1.3 percent last month and 5.2 percent this year, the person said. Patrick Clifford, a spokesman for Moore, declined to comment on the returns.
Long-short equity funds, whose managers can bet on and against stocks, advanced 0.2 percent for the month and 2.9 percent in 2012. Multistrategy funds fell 1 percent in November and 5.7 percent in 2012.
Cohen’s SAC Capital International rose 9.6 percent this year. The fund is run by SAC Capital Advisors, the $14 billion Stamford, Connecticut-based hedge fund that was notified last month by the Securities and Exchange Commission that it may be sued for insider-trading fraud. Jonathan Gasthalter, a spokesman for SAC, declined to comment on the returns.
Cohen told investors on a conference call last week that he acted appropriately when trading shares of Elan Corp. and Wyeth LLC, according to a person on the call.
Citadel, the $13 billion Chicago-based firm founded by Ken Griffin, rose 21 percent in 2012 in its main Kensington and Wellington funds, according to a person familiar with the matter. Katie Spring, a spokeswoman for Citadel, declined to comment on the returns.
Managed futures funds, which can use derivatives contracts in their trading strategy, lost 0.2 percent last month and 4.6 percent this year.
Winton Capital Management LLC, the $26.2 billion London- based managed futures hedge fund started by David Winton Harding, advanced 0.7 percent last month through Nov. 28 in its $10 billion Winton Futures fund, paring yearly losses to 5.1 percent, according to a person familiar with the matter. The firm’s $100 million Evolution fund fell 2.8 percent last month and 9.8 percent in 2012, the person said. Robin Eggar, a spokesman for Winton, declined to comment on the returns.
Pershing Square Capital Management LP fell 1.2 percent in November in its $6 billion Pershing Square International Ltd. fund, trimming yearly gains to 6.2 percent, according to a person familiar with the matter. Pershing Square is the $10.8 billion New York-based firm run by Bill Ackman, who is known for investing in companies to press for changes and who declined to comment on the returns.
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.
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