Renaissance Technologies LLC, Dan Loeb’s Third Point LLC and John Paulson’s namesake firm posted losses last month as hedge funds struggled to navigate heightened geopolitical tension,Federal Reserve guidance on interest rates and disappointing company earnings.
Managers across the spectrum fell 0.6 percent on average, according to Chicago-based Hedge Fund Research Inc., as the Standard & Poor’s 500 Index tumbled 2.9 percent in the last five trading days of July and junk bonds lost money last month for the first time in almost a year.
“Active managers were positioned with a view that global central bank policy would remain supportive,” Anthony Lawler, a London-based money manager at the $127 billion Swiss investment firm GAM Holding AG, wrote in an Aug. 5 report. “As a result, their positions were broadly hurt by the risk-off reversals into the month end.”
The losses pared gains for the $2.8 trillion industry to 2.5 percent in 2014, according to HFR, leaving hedge funds trailing the U.S. benchmark S&P 500 for the sixth straight year. David Einhorn said this week that he’s struggling to find value amid a five-year stock market rally after central bank stimulus policies propped up asset prices. His $10 billion Greenlight Capital Inc. posted losses of 2.9 percent last month in its main fund, reducing gains this year to 3.6 percent.
Equity strategies, where managers such as Einhorn can bet on or against stocks, fell 0.8 percent last month, paring yearly gains to 2.4 percent. Macro funds, which can wager on equities, bonds, currencies and commodities, decreased 0.7 percent in July, cutting 2014 returns to 0.3 percent. Event-driven funds, which invest in companies going through bankruptcies, takeovers or spinoffs, declined 0.4 percent last month and climbed 3.9 percent this year.
Renaissance Technologies, the $25 billion New York-based investment firm founded by Jim Simons, dropped 2 percent in July and 4.9 percent this year in its Renaissance Institutional Diversified Alpha Fund, according to a person familiar with the matter, who asked not to be identified because the information is private.
Third Point, Loeb’s $15 billion New York-based hedge-fund firm, decreased 1.2 percent in July, trimming yearly gains to 4.7 percent in its offshore fund, according to its website.
Paulson & Co. posted losses in its main strategies last month. The $22.8 billion New York-based firm’s Paulson Partners, which bets on companies involved in takeovers, fell 1.3 percent, pulled down by positions in health care and telecommunications sectors, a person familiar with the matter said this week. That pared year-to-date gains to 5.1 percent.
Some managers profited amid mixed signals over the Federal Reserve’s interest-rate outlook and higher volatility.
Autonomy Capital Research LLP, the $3.3 billion firm run by Robert Gibbins out of New York, posted a 2.6 percent July gain in its Autonomy Capital Global Macro Fund, lifting 2014 returns to 11 percent, said a person briefed on the results.
Tudor Investment Corp., the $13 billion hedge-fund firm run by Paul Tudor Jones, rose 1.6 percent in July, paring yearly losses to 2.6 percent, according to a person familiar with the matter.
Chicago-based Citadel LLC, the $21 billion investment firm run by billionaire founder Ken Griffin, climbed 2.7 percent last month in its main Kensington and Wellington funds, bringing returns this year to 9.9 percent, according to a person familiar with the matter.
Spokesmen for the hedge-fund firms declined to comment on the returns.