Long/Short equity and Event-Driven strategies have been the darling of hedge fund industry for the past couple of years, netting the best returns every year. Credit Suisse Event Driven Hedge Index is up 8.6% through August of this year, whereas CS Long/Short Equity Index is up 7.9% in the same period. With no other sub-strategy performing as well or even close to these two winners—the aggregate CS Hedge Fund Index is up 4% for the year.
Glenview Capital is now a hot hedge fund
This year, two of the best performing hedge funds are not those that we are used to seeing every year. Larry Robbins’ Glenview Capital which follows a equity long/short strategy has become a hot hedge fund with a return of +32.8% in the first nine months of 2013, according to HSBC Hedge Weekly. Glenview’s activism at Health Management Associates Inc (NYSE:HMA) and the bid from Community Health Systems (NYSE:CYH) has boosted the share price by upto 45% this year. Glenview’s other top positions also include a bunch of medicine and biotechnology related stocks, Life Technologies Corp. (NASDAQ:LIFE) is up 54% YTD, Thermo Fisher Scientific Inc.(NYSE:TMO) up 47%, McKesson Corporation (NYSE:MCK) up 36% whereas Flextronics International Ltd.(NASDAQ:FLEX) has gained 51% this year.
Larry Robbins also became the top holder of J.C. Penney Company, Inc. (NYSE:JCP), which has been a painful experience so far, as shares of the retailer have slumped over 50% in this year. Glenview holds 20 million shares of JCP, however the total effect of the loss puts a small dent in Glenview’s performance as it is not among the fund’s largest positions.
Glenview Capital was up 24% last year and has managed a 15% annualized return.
Nelson Peltz wins the best returns for Trian Partners
The other big gainer of the year is Nelson Peltz’ Trian Partners, whose assets under management have now exceeded $7 billion. The activist hedge fund has netted a gain of +31% for this year through Sep 27, Trian gained +5.6% in last month alone. Peltz’ concentrated long/short portfolio which comprises of eight core longs and one short position is worth $2.54 billion in total. Trian has done well in its top five positions that include, Mondelez International Inc (NASDAQ:MDLZ), up 22%, PepsiCo, Inc. (NYSE:PEP) up 17%, Ingersoll-Rand PLC (NYSE:IR) up 40%, Family Dollar Stores, Inc. (NYSE:FDO) 16%, The Wendy’s Co (NASDAQ:WEN) up 50%. The fund bought Sothebys (NYSE:BID) in Q2 which is currently the target of a wolf-pack of activist hedge funds is also up over 50% this year.
Nelson Peltz also bought E I Du Pont De Nemours And Co (NYSE:DD) in the second quarter, and this one has been a winner so far, the position is up 30% YTD. Trian Partners, founded in 2005, has an annualized return of 8.16%.
Read Nelson Peltz’ views on his largest investments in his Q2 letter.
Burbank and McGurie also net big numbers
The mutli-strategy/global event driven hedge funds followed by HSBC’s Hedge Weekly, have returned on average 16.3% YTD according whereas the equity long/short has churned out a gain of 9-10% in the same period. While HSBC follows the performance of a limited number of hedge funds in these categories, the difference from the rest of the hedge fund industry is evident in other indices as well.
John Burbank’s Passport Global has also racked up some nice gains this year. Passport Global Strategy is up 18.8% in the three quarters whereas Passport Long/Short Strategy Fund is up 16.5% to August while Passport Special Opportunities has taken in a gain of 28.5% in the same period. Same goes for Mick McGuire’s Marcato International, which has gained 19.8% through the third quarter, McGuire is also among the hedge funds that is hounding Sotheby’s.
Read a profile of McGuire’s successful activism here.
Full HSBC stats as of October 4th below