Barron’s Best 100 Hedge Funds for 2015 list came out over the weekend, and equity-focused funds outperformed for the second year in a row. Eric Uhlfelder of Barron’s notes that equity hedge funds rode the wave of a record-setting bull market moving into its seventh year. Moreover, in a repeat of last year’s results, Glenview Offshore Opportunity fund took the No. 1 spot on the list, with an eye-popping three-year annualized gain of 57.05%.
Glenview Offshore is run by legendary value investor Larry Robbins.
Robbins still bullish on stocks
Despite equity markets recently reaching new highs, Larry Robbins remains bullish on stocks.
“The market continues to show favorable conditions, including valuations that remain attractive, excessive corporate cash balances, and underlevered balance sheets,” Robbins notes.
He also says he expects executives and BoDs to be open to additional share repurchases, capital improvements, and acquisitions over the next few quarters.
Robbins also anticipates the U.S. economy growing at a reasonable rate, and argues that systemic risk has been reduced by central bank and regulatory policies.
More on Glenview’s 2014 performance
Robbins tells Barrons that he continues to find opportunities in equities, pointing out that 40% of his top 20 positions in 2014 were new. As one example, Glenview took a 14% stake in the largest operator of animal hospitals in the U.S. — VCA.
Vets are a “defensive stock” which won’t get too hammered in a downturn, and Robbins says shares are quite inexpensive at 14.5 times 2015 earnings, and expects top-line expansion of at least 5% after several years of low growth following the financial crisis. Furthermore, VCA is undertaking a $400 million share buyback, the firm is looking at acquisitions.
Of note, the stock has moved up smartly from $32 to $53 since Robbins first established a position six months ago..
More on Barron’s Best 100 Hedge Funds for 2015
Senvest Partners came in second place on Barron’s Best Hedge Funds list, with a three year average annualized return of 43.54%, moving all the way up from 37th place in 2013. Marlin LP ended up in third place for 2014, with a three year average annualized return of 41.63%. See more about Senvest here.
Uhlfelder highlights that the the impressive returns of Robbins and other top hedge funds stand out in a year when oil prices crashed, the U.S. dollar surged and the Cold War sparked up again in Ukraine. These difficult conditions resulted in fewer big winners this year. In fact, quite a number of well-known funds did not make the Barron’s Best Hedge Fund list this year, including Ray Dalio’s Bridgewater Associates, David Einhorn’s Greenlight Capital, Chase Coleman’s Tiger Global and Paul Singer’s Elliott Management.
Also of interest and reflecting the difficult conditions, quite a few notable hedge funds closed in 2014, such as Dan Arbess’ Perella Weinberg Xerion fund, and Brevan Howard’s iconic commodity fund. A number of macro funds closed down as well, (Josh Berkowitz’s Woodbine Capital Advisors, Keith Anderson’s Anderson Global Macro and Kingsguard Advisors). Everest Capital also shut down six of its seven funds after the surprise move in the Swiss franc late in the year. Hedge fund research firm HFR reports that 864 funds closed their doors last year, slightly fewer than the 904 that called it quits in 2013.