For a long/short equity  hedge fund, Clareville Capital’s Pegasus fund hashad a disappointing 2012. The fund managed to gain 0.8 percent in November, bringing the YTD returns to a mere 2.8 percent. The fund had lost 1.2 percent in 2011. Clareville Capital is based in UK and is managed by David Yarrow and Angus Donaldson.

Pegasus fund has profited from Dixons Retail PLC (LON:DXNS), Hunting plc (LON:HTG), Stagecoach Group plc (LON:SGC), Rolls-Royce Holding PLC (LON:RR) and Diageo plc (LON:DGE) (NYSE:DEO). The negative contributors were, John Wood Group PLC (LON:WG), Rightmove Plc (LON:RMV), Vodafone Group plc (LON:VOD) (NASDAQ:VOD), Booker Group Plc (LON:BOK) and Sports Direct International Plc (LON:SPD). The fund gained the highest profits from Dixons Retail PLC (LON:DXNS) in November.

The managers mention the Autonomy Corp and Hewlett-Packard Company (NYSE:HPQ) fiasco that has rattled the already troubled PC maker company. Hewlett-Packard Company (NYSE:HPQ) recently came under a firestorm when its subsidiary, Autonomy Corp (acquired in 2011) was accused of falsifying records in its balance sheet. HP suffered a $8.8 billion writedown after “serious accounting improprieties” were discovered at Autonomy. Pegasus fund managers refer to Peel Hunt and Cazenove as the only brokers who maintained their bearish take on Autonomy’s way of conducting business at a time when almost every other star analyst gave high ratings to the British software maker. The report does not mention it but several other individuals also saw problems with Autonomy, such as; Jim Chanos of Kynikos Associates and  John Hempton of Bronte Capital Management.

The case of Amazon.com, Inc. (NASDAQ:AMZN) is also presented, a company which recently exceeded expectations by raising $3 billion in bonds at an average rate of 1.6 percent for 6 years. This gives Amazon.com, Inc. (NASDAQ:AMZN) huge potential to grow in earnings and a solid base of capital to finance future projects.

In Pegasus’ monthly commentary, the managers accept that it is hard to to look at annualized returns or inception to date performance when the present numbers are looking so unattractive. The fund has returned 332 percent since its inception in 1997. The monthly report also emphasizes that hedge funds need to adapt to the changing global scenarios or otherwise they might face extinction. 50 percent of the hedge funds have closed their business in the past three years. Man Group Plc (LON:EMG) has seen its stock drop 40%. The fund also did not anticipate the way market reacted to Obama’s re-election. The reaction to fiscal cliff post-election has been significant, even though the problem had the same gravity before he was elected for a second term, The report talks about increase in Clareville’s assets under management, but gives no clue on the actual number.