Hedge Fund Industry Pulse Check
(http://HedgeFundBlogger.com) I was on the phone yesterday with a hedge fund investor who said he simply could not keep up with all of the news coming out on hedge funds without spending his whole work day tracking it. He wanted to know what to receive a series of updates within a single post.
Here is a collection of quotes on the current state of the hedge fund industry:
- Hedge-fund manager David Tepper entered the third quarter with $3.1 billion of U.S. stocks and exited with $648 million, selling most holdings to reduce risk and raise cash as carnage spread across the financial markets. “We moved a lot out early because we didn’t want to lose money,” said Tepper, 51, president of Appaloosa Management LP in Chatham, New Jersey. The firm, which switched some money to bonds, has between 30 percent and 40 percent of assets in cash.
- Regulatory filings last week by 38 hedge funds with more than $1 billion in assets each show that selling and market declines cut the value of their reported holdings by about 30 percent to $273 billion.
- At least 75 funds have liquidated or halted redemptions this year. With the Nov. 15 deadline for year-end withdrawal requests now past, fund managers may be forced to unload more stocks to pay off clients.
- Atticus Capital LP, based in New York, said its holdings declined to $510 million from $8.1 billion. In an Oct. 1 letter to investors, David Slager, 36, who manages the Atticus European Fund, told investors that more than 50 percent of his fund was in cash or U.S. Treasuries after he lost 43.5 percent year-to-date.
- At Tudor Investment Corp., the Greenwich, Connecticut, hedge-fund group founded by Paul Tudor Jones, 13F holdings fell to $453 million from $5.7 billion. Jones said markets face more selling from managers. “Our concern now is less over year-end fund redemptions, as record cash balances have already been raised in anticipation, but with prospective fund closures,” Jones, 54, said in an Oct. 31 report to his clients. “This latter event represents a tipping point at which a fund’s call on the market for liquidity goes non-linear.”
- SAC Capital Advisors, LLC of Stamford, Connecticut, said its holdings were $7.7 billion as of Sept. 30, down from $14.4 billion at June 30. Founder Steven Cohen, 52, had about half the firm’s assets in cash in mid-October, after his main fund fell 5 percent through September.
- Louis Bacon’s Moore Capital Management, LLC said the value of its 13F securities fell 69 percent to $1.4 billion, while at Jana Partners LLC, a firm overseen by Barry Rosenstein that makes activist investments, they fell to $2.1 billion from $5.9 billion.
- Jeffrey Vinik, who once ran the Fidelity Magellan Fund, disclosed that his Boston-based Vinik Asset Management LP held $1.8 billion at Sept. 30, down from $11.8 billion at June 30.
- “Movements in financial markets were so volatile, so unpredictable and so seemingly detached from fundamentals” that many hedge-fund managers “didn’t feel they had an edge,” said Doug Peta, an independent market strategist in New York. “The best thing they could do for their investors was to pull back entirely until markets returned to more of a sense of normalcy.”
- The largest funds, including those run by David Shaw, Kenneth Griffin and James Simons, reported smaller declines in their holdings. At Griffin’s Chicago-based Citadel Investment Group LLC, holdings listed on Citadel LP’s 13F fell 11 percent to $50.4 billion. Simons’s Renaissance Technologies LLC of East Setauket, New York, reported a 17 percent decline to $37.8 billion. At New York-based DE Shaw & Co., the filing showed a 20 percent decrease to $45.4 billion. Source
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