The 5.18 percent return on S&P 500 in January of this year brought handsome returns for most of the hedge funds except for those who had major exposure in Gold assets; for example, John Paulson’s Gold Fund lost 18 percent in February according to Bloomberg’s sources. Paulson’s other funds and strategies have been doing much better than the Gold Fund whose YTD decline till February is now up to 26 percent. In contrast to Paulson’s performance, the $1.1 billion Hutchin Hill Capital returned +2.8 percent in January. The flagship Diversified Alpha Multi-Strategy Fund (or Hutchin Hill Master Fund) returned 11 percent last year with major contributions from the London Whale fiasco.
Hutchin Hill’s winning strategy in January was Systematic and Quant, this has the highest allocation of fund assets. Other winning areas were Credit and Event Driven approaches. Hutchin Hill profited from European curve positions and arbitrage trades in U.S. indices.
In the Credit space, Neil Chriss’ Hutchin Hill was up as a result of the market rally and was infused after the resolution of fiscal cliff, gaining profits from short term credit default swaps and distressed securities in the U.S. and financials and semi conductor company in Europe. The fund is bullish on yield spreads in Italy and Spain and bearish on France and Germany.
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In corporate credit space, HH profited from long industrial against short financial IG spreads and from Libor rate trades in European banks. Hutchin Hill’s largest positions in corporate debt are in Block Financial LLC, Clear Channel Communications, ArcelorMittal (NYSE:MT) (AMS:MT), Bank of Ireland (NYSE:IRE) and Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), while in corporate CDS the top long positions are in Clear Channel Communications, Chrysler Group, Assured Guaranty Ltd. (NYSE:AGO), Caesars Entertainment Operating Company, Ford Motor Credit Company.
Going forward Hutchin Hill is maintaining a long view on sectors that experience cyclical growth like, autos and housing in U.S. and short view on sectors like retail, some tech companies and mining industry.
In the Event driven strategy, HH was able to squeeze more profits from the completion of Liberty Media Corp (NASDAQ:LMCA) (NASDAQ:LMCB)’s spin-off from Starz (NASDAQ:STRZA) (NASDAQ:LSTZA). Other profits were made in the energy, mortgage and car rental companies.
As mentioned in earlier posts, Hutchin Hill is long on large U.S. banks like Citigroup (NYSE:C) and bearish on small to mid cap banks and cerdit card companies. However Hutchin Hill’s equity portfolio was flat in January. In Macro strategy, the fund gained from currency pair trades like, EUR/CHF and USD/BRL.
Hutchin Hill has now expanded to UK. The firm’s London office, looked over by Damien Charveriat was approved by FSA on Feb 13.