Two long / short strategies went in opposite directions in October. The Visium Global Strategy continued its drawdown, down 3.3 percent net of fees in October, while the Ecofin Vista Long/Short fund, known to capture volatility-based opportunity, benefited from the volatility.
Visium Global Strategy cut positions during the October down draft
Calling the October intra-month swing “the widest since October,” the Visium portfolio team cut positions during the down draft and gross net exposures were tightened “consistent with their risk discipline.”
The fund was hit in the energy markets more on the long side than short. The sharp move lower in crude oil and other commodity prices caused damage to its energy portfolios, where losses on longs outstripped gains on short positions, an investment letter said. The largest detractor was Patterson-UTI Energy, Inc. (NASDAQ:PTEN), a provider of land drilling and pressure pumping services to exploration and production companies in North America. The fund also found difficulty in energy positions in Canadian Natural Resource Ltd (NYSE:CNQ) (TSE:CNQ), Devon Energy Corp (NYSE:DVN) and Hess Corp. (NYSE:HES).
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Visium was also on the losing end of a short selling bear thesis that was published by Kerrisdale Capital. As previously reported in ValueWalk, Kerrisdale Capital thinks Globalstar, Inc. (NYSEMKT:GSAT) because the wireless spectrum it is vying for is overvalued and its revenues are miniscule compared to its debt. The fund also had short positions in certain consumer names turned positive, while a long position in Whirlpool Corporation (NYSE:WHR) help limit the bleeding in October.
Ecofin Vista up 0.11% in October
The Ecofin Vista Long Short Fund, which has a downside deviation capture of 3 percent vs. an upside deviation of 22 percent, is somewhat amazing because it has realized volatility of only 5.39 percent. The fund’s long short strategy was up 0.11 percent in October and is up 2.82 percent on the year. The strategy targets industries and companies within six core industries that are impacted by changes in energy efficiency.
On the month the fund had a below average win percentage and was hit by its Asian exposure. Among the fund’s largest contributors to performance for the month were NextEra Energy Inc (NYSE:NEE) an integrated utility and leading renewable energy developer after the firm announced positive results. Going forward, the fund continues to have a positive outlook on renewable energy providers such as Next Era and Sunedison Inc (NYSE:SUNE), another renewable energy source which also contributed positively to returns. A negative contributor to returns was long exposure related to energy and short positions in utilities.