Not surprisingly, Equity Long/Short turned out to be the best-performing strategy in Q1 with an average return of 4 percent, as calculated by various hedge fund data sources. Among the small to medium sized hedge funds, Glenhill Capital was up 5.8 percent in the first two months of the year. GlenHill, a L/S equity hedge fund managed to perform well compared to the return on S&P 500, which rose 6.6 percent in the same period with dividends reinvested.
Glenhill hedge fund
Glenhill was able to profit from Sealed Air Corp (NYSE:SEE), Fifth & Pacific Companies Inc (NYSE:FNP), Restoration Hardware Holdings Inc (NYSE:RH), Motorola Solutions Inc (NYSE:MSI), Starwood Property Trust, Inc. (NYSE:STWD) and the German broadcaster, ProSiebenSat.1 Media AG (FRA:PSM). Glenhill has over $400 million in assets under management.
Deerfield Funds mostly invest in healthcare and biotech stocks both on the long and short side. The Deerfield Partners returned 3 percent in Q1. The fund was both profitable in some pharmaceutical stocks and at the same time lost big in other pharma holdings. The gaining longs of Q1 were, Questcor Pharmaceuticals Inc (NASDAQ:QCOR), Nektar Therapeutics (NASDAQ:NKTR), Endo Health Solutions Inc (NASDAQ:ENDP), Sagent Pharmaceuticals Inc (NASDAQ:SGNT) and Vectura Group PLC (LON:VEC). Deerfield lost in biotechnology shorts throughout the year and was also not profitable in its long position in Array BioSciences.
Deerfield’s special situations fund was much more successful and produced a return of 8 percent, here again Deerfield detracted in the short portfolio. Here the fund was profitable from long Pacific Biosciences of California (NASDAQ:PACB) and expects to gain more as Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) starts selling its anti-obesity medicine, Belviq.
Another L/S equity hedge fund, Grey Owl Capital returned 7.8 percent in the first quarter. The fund profitably closed its positions in The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NYSE:PEP), Abbott Laboratories (NYSE:ABT) Lexmark International Inc (NYSE:LXK) and Howard Hughes Corp (NYSE:HHC).