Ken Griffin, Founder and CEO, Citadel, speaks during the Milken Institute's 22nd annual Global Conference in Beverly Hills, California, U.S., April 30, 2019.Mike Blake/Reuters
Hedge funds recorded gains in April when stocks posted their biggest monthly return in decades thanks largely to government rescue packages designed to fuel growth stalled by lockdowns to fight the coronavirus pandemic, managers and investors said.
Citadel, the Chicago-based hedge fund giant which relies on teams of traders to make bets on stocks, bonds, commodities and other securities, earned a 4% return in its flagship Wellington hedge fund last month, according to a performance estimate. The fund is now up 10% for the year, a person familiar with the numbers said.
Similarly, Pershing Square Capital Management, the New York-based hedge fund that pushes companies to perform better, gained 5.6% in the first three weeks of April, leaving it up 9 percent for the year through April 21, data show.
Ken Griffin, who runs Citadel, and William Ackman, who runs Pershing Square, identified the coronavirus’ dangers early and positioned for shocks. By the time the market recovered ground, they benefited from the S&P 500 index’s 13% jump in April. For the year, the S&P has lost 10%.
The average hedge fund gained 2.73% for the month through April 23 and are now off only 4.6% for the year, data from Morgan Stanley show.
Some firms also benefited from volatility in oil markets where prices, for a time, fell so far that sellers had to pay buyers to take oil off their hands.
Benn Eifer’s QVR Advisors’ absolute return strategy gained an estimated 7.57% last month leaving it up 59.44% for the year, an investor said. Hedged positions in dividend futures helped as did option positions which benefited from the volatile move lower in oil prices, the investor said.
Franklin Parlamis’ Aequim Alternative Investments, which specializes in relative value arbitrage, gained roughly 3% in April, leaving it up roughly 5% for the year, an investor said.
Most hedge fund managers are still finalizing their numbers for April.
Not everyone made money last month, however.
David Einhorn’s Greenlight Capital extended losses with a 1.1% drop in April which leaves the fund down 22.3% for the year, an investor said. Looking ahead Einhorn warned that technology companies, which fueled last month’s gains, could be vulnerable if ongoing economic weakness hurts their advertising.
Hedge fund industry investors polled by law firm Seward & Kissel said there is demand to invest with experienced managers, especially in distressed debt markets. New managers however may have more trouble raising cash especially after investors soured on the industry in the first quarter and pulled 1% of capital out, data from Hedge Fund Research show.
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