Hedge Fund News Wrap: Week Ending 1/3/14

Hedge Funds Return 8 Percent and Gain $225B in 2013

According to the Eurekahedge Hedge Fund Index, hedge fund managers were up 2.53 percent in the first half of the year, and 5.36 percent for the second half.

hedge_fund_news_wrapHedge funds generated returns of 8.02 percent, and gained a total of $225 billion in assets for the year—the fastest annual growth since 2007,

driving industry assets to a historic high of $2.01 trillion.

However, hedge funds lagged behind the broader market for most of the year. The Dow Jones Industrial Average posted a 26 percent gain for 2013, its best yearly performance since 1996.

Hedge fund managers attracted $146.1 billion in net capital allocations during the year; an impressive improvement after the industry recorded $109.6 billion of net asset flows in the previous three years combined.

Distressed debt funds were among the best performers, gaining 16.8 percent in 2013. Long / short equities funds were up 14.3 percent, and event-driven strategies were up 11.3 percent.

Asia Pacific funds were the strongest regional performers, up 15.3 percent.


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Huffington Post



SAC Capital Advisors Goes Out on a High Note

Steven A. Cohen’s SAC Capital Advisors is exiting the hedge fund industry, and the year, on a high note.

The embattled hedge fund was up 20.1 percent through December 27, according to a source for the Wall Street Journal. In contrast, the average multi-strategy hedge fund was up 9 percent through the end of November, according to the Absolute Return Multistrategy Index.

In November, SAC was ordered to pay $1.8 billion in civil and criminal penalties, and agreed to stop managing outside capital. According to the Wall Street Journal, at least six of the firm’s employees have been involved in insider trading over the past ten years.

As a result, the firm began scaling back, with some of its investment workforce leaving for other competitors, such as BlueCrest Capital Management and Millennium Management.

SAC Capital will operate as a family office, and will manage Cohen’s money exclusively.


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The Wall Street Journal




Commodities Hedge Fund Higgs Capital to Close

Commodities hedge funds were among the worst industry performers in 2013, and as a result, many commodities funds closed their doors. In the last days of 2013, another commodities hedge fund joined the growing list of the departed;Higgs Capital Management followed in the footsteps of Clive Capital and Arbalet Capital, and announced that it will wind down in an “orderly fashion” while returning money to its investors.

“Over the life of the fund we made money. Our closing is largely a factor of redemptions that are happening in the commodity market and lack of stability of our capital,” said founder Neal Shear, who helped build Morgan Stanley’s commodities trading unit in the 1980s.

The firm was founded in early 2012, and managed $250 million while focusing on energy, metals, and agriculture.

FINalternatives cites, “declining investor appetite for commodities hedge funds” as a reason why many commodities funds are closing.


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Financial Times



Second Hedge Fund Attacks Darden Restaurant Group

Last month, Darden Restaurants Inc. was facing mounting pressure from the hedge fund firm, Barington Capital Group, which demanded that Darden move Red Lobster and Olive Garden into a separate company.

Now, Darden is facing pressure from a second hedge fund, Starboard Value.

Starboard Value has taken a 5.6 percent stake in the restaurant conglomerate, which is twice as large as the position held by Barington. And now, Starboard is expressing its dissatisfaction with the restaurant group’s spin-off plans.

“Starboard believes that the plan outlined by management falls significantly short of the actions required to maximize shareholder value,” Jeffrey Smith, from Starboard, wrote in a Securities and Exchange Commission filing. In addition, Smith wrote that Starboard was “disappointed in the continued poor financial performance.”

However, Starboard has yet to outline the steps it would recommend for the restaurant group.

According to FINalternatives, Darden hasn’t been contacted by Starboard.


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