Hutchin Hill Rebounds Late Year, Profits Off Merger Arbitrage

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Hutchin Hill Capital managed to stay on the positive end of returns for November 2012, with a +0.89 percent return for the month. The total returns through November for last year are now +8.73 percent.  The hedge fund has not yet released its December results. However, its largest gain was reported in October with +4.3 percent performance. The fund saw gains in its systematic/quant and credit and macro strategies, while detracting in the event driven portfolio.

Hutchin Hill Rebounds Late Year, Profits Off Merger Arbitrage

In Event driven strategy, Hutchin Hill had profited from the merger of  Hertz Global Holdings, Inc. (NYSE:HTZ) and Dollar Thrifty Automotive Group, Inc. (NYSE:DTG). This time the portfolio benefited when the Federal Trade Commission finally approved the deal which resulted in the outperformance of  Hertz Global Holdings, Inc. (NYSE:HTZ), HTZ was up 17.8 percent in the month of November. However, these gains were not enough to offset the underperformance in other investments. According to the Q3 13f, Hutchin Hill holds 2.14 million shares of Hertz Global Holdings, Inc. (NYSE:HTZ) and 566k shares of Dollar Thrifty. Going forward the fund is focusing on companies that are diversifying into the REIT structure and are paying more dividends.

The fund reduced exposure in the financial sector in November, due to the uncertainties related to fiscal cliff, a trend which differs from most hedge funds. HH initiated a long position in exchange stocks and a short in a credit card company, while liquidating its investment in a mortgage servicer. The fund lost in managed futures strategy and has steered clear of bonds due to very low yields. In the Opportunistic strategy, the fund lost in its long position in gold.

The fund was up in its long Europe against short US positions in the quant portfolio. In the arbitrage strategy, Hutchin Hill made profits in the US Energy and Healthcare sector. In its global equities, the fund gained in Canada, UK and Hong Kong. In the relative value credit strategy, the fund lost due to the continuing legal tussle between Bank of America Corp (NYSE:BAC) and MBIA Inc. (NYSE:MBI), where CDS market widened on fears that MBIA will default. Another contributor to this underperformance was the low earnings reported by retail companies. The fund also has a short position in a PC/Printer company, which has not been very profitable. Hutchin Hill was profitable in the corporate credit long/short strategy.


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