Hedge Funds Had A Dismal Q1, Dan Loeb’s Fund Was An Exception


In the first quarter of 2013, Hedge funds returned only 3 percent on an average, which when compared to a 10 percent return of S&P 500 index fund looks a bit small.

Bank of America Merrill Lynch’s global diversified hedge fund index returned 6.8 percent less than the S&P 500 in the first quarter. This was unusual as generally in the first quarter hedge funds outperform the market, on an average gaining 3.1 compared to 1.8 percent average S&P 500 return since 1995, revealed a report from Bank of America Corp (NYSE:BAC).

However, there is one exception to dismal performance by the Hedge funds, and it is none other than the Vocal activist and founder of Third Point Partners Dan Loeb. Loeb with him acumen was the standout and his investments in Yahoo! Inc. (NASDAQ:YHOO), Japan and liquid natural gas play Cheniere Energy, Inc. (NYSEAMEX:LNG) earned the firm’s Ultra Fund a return of 13.3 percent for the same period.

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Yahoo was the top performer for Loeb and was up 19 percent in 2013. Yahoo’s performance was based on the hopes that CEO Marissa Mayer, whom Loeb installed after a board reshuffle last year, can help the company to earn higher ad revenues and more search clicks.

Loeb notoriously known for his sharp remarks on executives has been among the most talked personality in the hedge fund community over the last year mainly due to his vocal invasion of Silicon Valley through Yahoo! Inc. (NASDAQ:YHOO). The hedge fund manager was also involved in going long Herbalife (NYSE:HLF) alongside Carl Icahn in the legend’s battle against Bill Ackman.

“Japanese Macro” was the second best performer for the hedge fund manager as reported by CNBC. Japan’s Nikkei 225 index gained 15 percent this year owing to the aggressive monetary plans promised by the new Prime Minister Shinzo Abe.

For the second quarter, Loeb’s top positions are Yahoo! Inc. (NASDAQ:YHOO), gold and American International Group Inc (NYSE:AIG).

Coming to Loeb’s rival event driven funds, which mainly focus on companies with an upcoming catalyst like a merger, gave a maximum of 5 percent return up till now, reveals a data from bank of America.

An interesting fact about Loeb’s Ultra fund is that in its inaugural year, in 1997, the fund earned a whopping 98.3 percent compared to the 33.4 percent of S&P. In its worst year 2008, Ultra fund lost 38.6 percent against 19.2 percent average drop for hedge funds.

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