We have spent the last few weeks scouring dozens of reports on hedge funds’ performance and asset flow trends in 2012 and have consequently issued some lists detailing the best performing hedge funds of last year. However it seems that we missed a few, especially those falling in the range of small to mid sized hedge funds.
The rounds of fiscal easing coming from all sides of the world helped everyone in the hedging world boost their returns and breathed a new life into equities and credit spreads.
The top in the line among the lesser known hedge funds is 400 Capital Credit Opportunities Fund with an eye popping 34.2 percent return in 2012 under assets of $354 million. The fund profited from several opportunities in the ABS market and structured credit like CLOs. Credit had the best performing strategy across the board last year and earned a number of similar funds a top rank in returns.
The unheard of, Sea Bluff Partners, managed by Tucker Brockhoff and Wesley Huggett, returned 24.9 percent last year and the managers are pleasantly surprised by their own brilliant returns. The fund profited from its investment in Quicksilver Resources Inc (NYSE:KWK).
Equinox Partners, after lagging in November, accelerated with fervor in the last month of 2012. The firm returned in excess of 17 percent. Equinox probably cashed in on the long exposure in Brazil and Indonesia, because their long positions in these countries was reduced significantly compared to November.
The upward trend in equities is now so well pronounced that the ‘bond kings’ of the past are joining in on the equity rush. Bill Gross of PIMCO and Jeff Gundlach of Double Line Capital have talked about the bleaker future of bond market as opposed to the tailwinds for equity market.
A hedge fund that performed particularly well was Sahm Adrangi’s Kerrisdale Capital with a 29 percent net return. We posted their latest investor letter that is especially interesting because of Adrangi’s long thesis on Herbalife Ltd. (NYSE: HLF).
Although not exactly a mid sized hedge fund and neither returning as high as the other funds mentioned above, Oak Ridge’s Small to Mid Cap Portfolio returned well in last year and was up 10.77 percent. Oak Ridge has about $2.1 billion in assets under management in this strategy.
The fund profited from investments in Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR), Sirona Dental Systems, Inc. (NASDAQ:SIRO), Gulfport Energy Corporation (NASDAQ:GPOR) and Oasis Petroleum Inc. (NYSE:OAS) while underperforming in Robbins & Myers, Inc. (NYSE:RBN), Actuant Corporation (NYSE:ATU), BankUnited (NYSE:BKU) and Prosperity Bancshares, Inc. (NYSE:PB). Oak Ridge added positions in Omnicell, Inc. (NASDAQ:OMCL), HSN, Inc. (NASDAQ:HSNI) and Synchronoss Technologies, Inc. (NASDAQ:SNCR) while exiting positions in Informatica Corporation (NASDAQ:INFA) and HMS Holdings Corp. (NASDAQ:HMSY).
Another name that profited from the outperformance seen in equity market was Hawkeye Capital Partners, which was up 12 percent last year. The fund profited from the acquisition of Warnaco Group Inc (NYSE:WRC) by PVH Corp (NYSE:PVH) at a price of $68.43 per share, announced in late October. Hawkeye also gained from KapStone Paper and Packaging Corp. (NYSE:KS) while incurring minor losses in Willis Group Holdings PLC (NYSE:WSH), Blucora Inc (NASDAQ:BCOR), Imation Corp. (NYSE:IMN) and short in Cemex SAB de CV (NYSE:CX). Hawkeye closed its position in Willis Group Holdings PLC (NYSE:WSH).