Citadel, Third Point Among Firms Posting Gains in November

December 04, 2012   Stephen Taub

A handful of hedge fund firms are outpacing both their hedge fund peers and the broader indices this year and kept up their winning streaks last month.

   Third Point's Daniel Loeb; Photo: (Bloomberg)
Several high profile hedge funds posted strong gains in November and are outperforming the broader averages entering the final month of the year. They are also beating the average hedge fund, which lost 0.24 percent last month, according to the Credit Suisse Liquid Alternative Beta Index.

These include Ken Griffin’s multistrategy funds, Kensington and Wellington, which gained 2 percent in November. With that gain, the two flagship funds for Griffin’s firm, Citadel, are now up 21 percent for the year. Investors say the funds recorded gains in all strategies the funds invest in, including equities, credit, and energy, among other areas. In addition, Citadel’s Global Equities fund gained 1.55 percent for the month and is now up 16.7 percent this year through November.

For comparison, the S&P 500 was up 0.3 percent in November and is up 12.6 percent for the year. The Nasdaq Composite is up 15.5 percent for the year.

Dan Loeb’s $5 billion Third Point Offshore Fund, managed by his firm, Third Point, netted a 2.9 percent gain in November and is now up 19 percent for the year. Loeb’s top five winners for the month were his high profile bet on Greek government bonds, his activist stake in Yahoo, and long positions in auto parts maker Delphi, managed health care provider Aveta and Ally Financial, the former GMAC. His five biggest losers were American International Group, an undisclosed short position, long positions in Apple and cable giant Liberty Global, and another undisclosed short position. Entering December, Third Point’s top positions were Yahoo, the Greek debt, AIG, gold and Murphy Oil.

Among mid-size funds, Brett Barakett’s $1 billion Tremblant Partners, managed by Tremblant Capital Group, rose 4.8 percent in November, pushing up its full-year gain to 14.2 percent. Tremblant Concentrated — which is similar to the flagship fund but adds leverage to each position — was up a very strong 6.3 percent in November and 18.9 percent for the year.

November gains were driven by long positions in Green Mountain Coffee Roasters — a favorite and successful short of David Einhorn’s Greenlight Capital — and Softbank, a Japanese telecommunications company. Green Mountain has actually been a big winner all year for Tremblant, which has benefitted from aggressively trading the stock. It pared back its position in February when the stock hit its peak and plowed back into the stock in May after Green Mountain bottomed following its disappointing earnings report.

Other big gains this year came from Sprint; Melko Crown Gaming, which is a play on the Macau gambling boom; Sodastream, which makes soda machines; Dunkin Donuts; clothing retailer Ann Taylor; and Fifth & Pacific, the former Liz Claiborne Inc., which owns fashion brands Juicy Couture, Kate Spade, Jack Spade and Lucky Brand Jeans.

Several hedge funds that are structured more conservatively are having pretty decent years as well, even though they are lagging the major indices.

For example, Dan Och’s OZ Master Fund, managed by his multistrategy hedge fund firm Och-Ziff Capital Management Group, eked out a 0.46 percent gain in November, putting it up 10 percent for the year. The firm’s OZ Europe Master Fund is up 8.10 percent for the year. Och Ziff disclosed it had $32 billion in assets under management as of December 1, which reflects a net increase of approximately $200 million since November 1, 2012.

Millennium Management founder Izzy Englander’s two main funds are also plodding along this year. His Millennium USA is up 6.10 percent, while Millennium International is up 5.70 percent.

But his clients probably aren’t complaining. Englander may not rank among the top performers this year, but his investors are mindful that the funds were only down a few percentage points in 2008, when many hedge funds lost 20 percent to 40 percent that year.

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