Hedge funds are a good way to magnify the return of one’s portfolio, but big returns come with big risks as well. However, hedge funds use a number of strategies to minimize the risks. One such strategy is long short that allows the fund manager to maximize the upside of markets, as well as limit the downside risk. In this strategy, the fund manager goes long on the undervalued stocks and shorts the overvalued stocks. If you also feel the urge to invest in hedge funds using such a strategy, then detailed below are the ten biggest long-short hedge funds.
Ten biggest long-short hedge funds
Following are the ten biggest long-short hedge funds on the basis of AUM (assets under management):
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- Bridgewater Associates
Founded in 1975, this hedge fund had about $160 billion in assets under management as of February 2020. The clients of this Connecticut-based fund of Ray Dalio are institutional investors, charitable foundations, university endowments, and pension funds. As of March 2020, Dalio’s net worth was estimated to be $18.7 billion, while in 2018, the hedge fund manager got more than $1 billion in compensation.
- Lone Pine Capital
Founded in 1997, this Greenwich, Connecticut-based hedge fund uses the long-short strategy to pick their stocks. The hedge fund is known for investing in business fundamentals. However, it has favored tech firms with high valuation, but with high growth potential. The hedge fund has also been investing in private companies. Stephen Mandel, Jr., who started his career with investor Julian Robertson’s hedge fund Tiger Management, is the founder of Lone Pine. It had about $33.157 billion assets under management in 2017.
- Egerton Capital
It is a British hedge fund founded in 1994 by John Armitage and William Bollinger. Egerton Capital works as an investment management firm and invests in liquid, large-cap, and publicly traded equities. As of March 2019, Egerton had $19.8 billion in assets under management.
- ValueAct Capital
It is a San Francisco-based investment company that offers its services to high net worth individuals and institutions. ValueAct Capital is a privately owned hedge fund sponsor that primarily invests in the public equity markets. It was formed in June 2000 with the objective of managing the capital of its founders and of a limited number of outside investors. It had about $17 billion in assets under management in 2017.
- Brummer and Partners
Brummer and Partners is a Stockholm, Sweden-based hedge fund. This hedge fund has been operating for about 25 years now bringing together fund managers pursuing different investment strategies and a multi-strategy concept. The hedge fund relies on tried and tested strategies, processes and principles with a focus on absolute return. Brummer and Partners was founded in 1995 and it had about $14.2 billion in assets under management in 2017.
- Polar Capital Partners
Founded in 2001, it is an investment management firm based out of London. It works as a subsidiary of Polar Capital Holdings PLC and invests in health care, finance, and consumer discretionary sectors. According to GuruFocus, it currently holds about $12.8 billion in total assets under management, up from $1.5 billion back in 2010.
- Senator Investment Group
Senator Investment Group was founded in 2008 by co-founders Alexander Mathew Klabin and Douglas Nathan Silverman. This private hedge fund sponsor is based out of New York City and holds about $12 billion in total assets under management spread across 9 accounts. Senator Investment Group is more tilted toward the consumer discretionary sector, which accounts for the bulk of its investments. It uses a bottom-up analysis to make its investment decisions and focuses its asset allocations in the value stocks of various firms.
- Soroban Capital Partners
Based out of New York, Soroban Capital Partners is a hedge fund sponsor owned by its employees. It was founded in 2010 by Eric Weinstein Mandelblatt, who is the CIO of the company. This hedge fund invests in public equity and alternative investment markets with a focus on the U.S. and Western Europe. It carries out its own in-house research and uses a fundamental approach to decide on the investment. Soroban Capital holds about $11 billion in total assets under management.
- Scopia Capital
It is an institutional alternative asset management firm. Scopia Capital, based out of New York City, was founded in 2001 by cofounders Jeremy Hendrik Mindich and Matthew Ivan Sirovich. It mainly invests in industrial and health care sectors, as well as information technology and finance sectors. Scopia Capital has about $9.8 billion in total assets under management, up from under half a billion in assets back in 2010.
- AKO Capital
It is an investment management company that was founded in 2005. The company offers equity services to individual investors, charitable foundations, institutional investors, HNIs and more. AKO Capital is based in London and has approximately $2.4464 billion in assets under management, according to Hedgelists.