With the 2016 HSBC Hedge Weekly performance rankings in the books – a year in which the same leader-board entries pretty much dominated unchallenged throughout the year – comes a new leader board that is a hard-scrabble mix of hedge fund styles and categories. What is clear after but a few short weeks of performance reporting is that some hedge funds strong start is in contrast to last year’s performance. Many major categories with a few exceptions are starting off 2016 with positive performance. The winners include William Ackman’s Pershing Square Capital Management, Murdick Distressed Opportunity Fund as well as biotech stock picker Perceptive Life Sciences.
Distressed leader and consistent biotech stock picker part of hedge funds strong start in 2017
The Distressed Security Global category is up 1.07% early, with Jason Mudrick and his $1.4 billion Mudrick Distressed Opportunity Fund leading the category, up 1.7% as of January 6. After strong 38.9% performance in 2016 – the strongest showing in five years – the fund with 9.74% standard deviation and a 31.42% worst drawdown, Mudrick and the entire distressed category are looking to finish strong in a rising rate environment. Last year the category reported 10.05% performance on the final issue of the year. Repeating this feat will require strong beta market support as well as calculated individual investment selection methodology.
Last year was probably the most disappointing year for somewhat spoiled Perceptive Life Sciences Offshore Fund clients. Joseph Edelman’s $1.6 billion stock selection skills in the generally smaller pharma and biotech fields, where picking winning stocks amid FDA test result and research and development tests can at times feel like a low win percentage, high win size experience. But Perceptive Life Sciences, up 2.92% year to date, has delivered strong performance in the teens each of the last five years except 2016. So far in just a week, Edelman has more than doubled the fund’s 1.21% 2016 annual performance.
In the Equity Diversified / Europe category, Samuel Joab’s nimble Lansdowne Princay Fund is out to a sizable 2.26% returns lead, while the 265 million (euro) Legg Mason Martin Currie Europ ABS Alpha Fund Class M is off to a strong start, up 1.29%. Last year the category was down 5.04%. In the Equity Diversified / Global category, the $2.4 billion Lansdowne Developed Markets Long Only Fund is up 2.82%, performing significantly better than 2016’s -5.33% showing.
Activist investor William Ackman and his $3.8 billion Pershing Square Intl Ltd is up 1.60% in early 2017 and on the positive leader board after two years dragging the bottom 20 list.
Macro hedge funds stumble out of gate, while managed futures CTAs turn in mixed results
The $254 million Millburn Commodity Program is up 1.87%, almost completely turning around last year’s -1.90% returns. The $678 million Millburn Diversified Program in the Systematic Global category is up 1.56%. On average the category is down slightly on average, -0.01%, but there is a wide diversity of returns. Anthony Todd’s $715 million Aspect Diversified Fund – Class A is up 1.50% after being negative by -9.50% in 2016. The $2 billion DB Platinum IV DBX Systematic Alpha Index Fund is up 1.04%. Noted short term systematic trader Roy G. Niederhoffer and his $777 million Diversified Offshore fund leads all hedge funds to the downside early, of -2.50% after being down -12.77% last year. The $286 million Tulip Trend Fund, up 18.79% last year, is down -2.12% early in 2016.
Both Niederhoffer and Tulip Trend Fund lead in a negative category, coming in number two and three respectively on the Bottom 20 list early in the year. Other notable funds struggling early out of the gate in 2017 include Andrew Law’s $5.8 billion Caxton Global Investment, down -1.03%; the $3.6 billion Renaissance Institutional Diversified Alpha Fund, down -0.95% along with fellow mathematically minded $1.3 billion Tudor Discretionary Macro Fund Fund Class 1, down 0.71% early in 2017.