The Morning Brief: New Funds and Paulson's Rebound

October 08, 2012   Stephen Taub

In today's Morning Brief:

It’s getting harder to start a new hedge fund. Industry tracker Hedge Fund Research reports there were 245 launches in the second quarter of 2012, which is the lowest number since the fourth quarter of 2010. But this isn’t surprising: Investors are becoming a little leery of hedge funds, given that most funds are missing out on the great bull market of 2012 and the average fund lost money last year, according to HFR.

Bad news for Apple fans, a group that seems to include most hedge funds. Its stock closed Friday below its 50-day moving average for the first time since late July. Maybe the funds that bought the stock last Friday for quarter-end window dressing are now kicking themselves.

Finally some (relatively) good news for John Paulson. The hedge fund manager still living off the reputation he built betting against sub-prime loans in 2007 pared his losses in his Gold and Advantage funds in September. Now the Paulson Gold fund is only down 3.9 percent for the year after a 13 percent gain that month, while the Advantage fund is off 14 percent after returning 3.6 percent in September. Of course, the S&P 500 was up more than 16 percent in the first nine months.

Moore Capital Management’s European unit made $51.3 million in 2011, which was a 45 percent increase from 2010, after the firm cut expenses, according to reports. Moore Europe’s profits were then distributed to seven individuals, including firm founder Louis Bacon and portfolio manager Greg Coffey. Never mind that Moore Global Investments (managed by Bacon), Moore Macro Managers and the funds run by Coffey all lost money last year. (Earlier this year, Bacon returned $2 billion to investors on the grounds that the size of the  firm’s flagship fund may have hampered performance.)

The average hedge fund was up 2.6 percent in the third quarter and 5.1 percent for the year, according to one database. Sorry, but my Vanguard index fund is doing more than three times as well with low fees. (Yes, I know it  got hammered in 2008). 

Remember that Argentinian ship that Elliott Management is trying to seize? Well, the folks in the government of Ghana are still holding it in the port of Tema, outside Accra, Ghana, awaiting a court order.

Bank of America/Merrill Lynch provides the innovative research and market insights that will help you succeed, including commentary on the key themes for the year ahead as well as trends driving growth in important industries and sectors. You will gain access to global research and the other information you need to make informed investment decisions.

Click here for more details.

Latest Poll

Do activist hedge fund investors ultimately add value to the companies they target?

 - 58%
 - 42%

View previous results