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Hedge Fund Credit Bets

Hedge Fund Credit Bets

Hedge Funds Pulling Away From Credit Bets After Rally

Earlier this week, we reported that hedge funds made solid gains from the rally in credit markets.  Now, some hedge funds are pulling away from fixed-income bets after the rally fearing an possible slide.
Hedge-fund returns were boosted by this rally in the first quarter. But now some of those managers are cutting or hedging those bets.

Glenview Capital Management, run by Larry Robbins, returned an estimated 3.4% in March, after fees, according to an investor. That helped the firm recoup losses from recent years and got it back above its so-called high-water mark, allowing it to start collecting lucrative performance fees again, the investor said.
In a letter to investors earlier this year, Robbins noted that tighter credit spreads have been a welcome relief, but warned that most of the returns from this trend already have been made. Because of this, Glenview systematically has been liquidating credit positions as they hit targets, he added, according to another investor who received the letter.
Owl Creek, a hedge-fund firm run by Jeffrey Altman that invests in equities and debt, returned almost 8% through March 26 this year, according to data gathered by HSBC's private-banking unit.  Source


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