Citadel, Millennium Stage Comeback to Reverse Losses in 2016

  • Griffin, Englander hedge funds among those gaining last month
  • Industry confronting performance woes and client defections

How the mighty have fallen -- and gotten back up.

In a year marked by poor performance among many major hedge funds, managers from Citadel to Millennium are on the upswing.

After falling 5 percent in February and losing money in June and July, New York-based Coatue Management’s offshore fund rose 2.3 percent in September, according to a document obtained by Bloomberg. The $10 billion firm, run by Philippe Laffont and known for betting on technology companies such as PayPal Holdings Inc., gained 1.9 percent in the fund for the first nine months of 2016.

Izzy Englander’s Millennium Management, which suffered its third-worst month ever in February, is also out of the red after climbing 0.9 percent in September and 1.1 percent in August, according to a person with knowledge of the matter. The New York-based multimanager fund was up 1.9 percent in 2016 through September.

Hedge funds, which charge some of the highest fees in the money-management business, have faced mounting criticism from clients over steep costs and performance that mostly hasn’t kept pace with stock markets since the financial crisis. The industry had its worst outflows in July since early 2009.

Lousy Start

Equity funds started the year on the wrong note, losing 4.6 percent in January, but after rebounding with stock markets they were up 4.2 percent this year through September, according to Hedge Fund Research Inc. Event-driven funds also have bounced back, posting gains averaging 6.7 percent in 2016 after sliding more than 3 percent in January.

Ken Griffin’s Chicago-based Citadel has made one of the strongest recoveries, with its flagship Wellington fund back in the black after losing as much as 9 percent in early March when its Surveyor unit suffered losses. The fund was up 7.3 percent last quarter as it has profited from bets on equities and government bonds. It gained 2 percent in September.

Andreas Halvorsen’s $31.7 billion firm Viking Global Investors has pared losses since declining 3.1 percent this year through July. After rising 0.8 percent in September and 1.9 percent in August, the Greenwich, Connecticut-based equity fund was down 0.5 percent this year.

Bridgewater Associates, based in Westport, Connecticut, benefited from September gains. Its All Weather fund, which invests in stocks, bonds and currencies and tries to protect against market turbulence, made money last month and was up more than 14 percent this year. The firm’s Pure Alpha II macro hedge fund, however, pared losses for year to 10.3 percent after gaining 0.5 percent last month.

The flagship multistrategy fund for Och-Ziff Capital Management Group LLC last month also extended its gains for the year to 1.1 percent after exiting the red in August.

Smooth Ride

Some firms have posted hefty gains while avoiding the performance roller-coaster.

Zimmer Partners, the $3.2 billion energy-focused firm, gained 0.2 percent in September and 19 percent this year in its largest fund, ZP Utility, according to a document obtained by Bloomberg. The New York-based firm’s other fund, the long-biased ZP Energy, returned 1.8 percent last month and 27 percent in 2016.

HG Vora Capital Management, a New York firm overseeing $2.7 billion, gained 1.9 percent in its Special Opportunities Fund in September to bring returns for the year to 11.4 percent, according to another person briefed on results.

For other firms, September was no help.

Renaissance, Brevan

At Renaissance Technologies, the New York-based firm that uses computer-driven strategies, the Renaissance Institutional Equities Fund fell 1.9 percent for the month, paring its return for the year to about 13 percent, said a person with knowledge of the matter.

The slump deepened for Passport’s Global Strategy fund, which declined 2.8 percent last month and 13.6 percent this year through September, according to an investor document obtained by Bloomberg.

Across the pond, Brevan Howard Asset Management’s main hedge fund continued to lose money, declining 0.9 percent in September. The Brevan Howard Master Fund, which had $14.2 billion as of August, was down 3.4 percent this year.

Early October was rough for at least one firm.

Horseman Capital Management, which runs $2.4 billion, saw its biggest fund -- the Horseman Global Fund -- fall about 1.5 percent in the first five days of this month, extending its loss for the year to 2 percent, according to a document obtained by Bloomberg. Its European Select Fund plunged more than 35 percent this year after losing almost 4 percent this month through Oct. 5.

Spokesmen for the firms declined to comment.

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