Nothing like a surging stock market to shine a brighter
light on hedge funds. The average hedge fund gained 1.16
percent last month. More significantly, for the second straight
month, more than 70 percent of hedge funds posted gains,
according to a new report from eVestment. January was also the
eleventh positive month in the past 12 for the average hedge
fund. The biggest winners last month were strategies most
investors probably didn’t have exposure to.
According to eVestment, Brazil-focused hedge funds generated
average gains of 7.72 percent while Russian-focused funds
gained 4.17 percent. Altogether, emerging markets funds were up
3.37 percent, on average, in January. The biggest losers were
the managed futures funds, a strategy that boasts a virtually
non-correlation to stocks. They were down, 0.74 percent, on
average. Macro funds were down 0.33 percent last month.
Wow. Shares of Sears Holdings exploded, surging more than 25
percent to close at $6.96 after jumping nearly 50 percent
during the trading session following the shriveling
retailer’s announcement that it’s
totally revamping the company. The company said it plans to cut
costs by at least $1 billion on an annual basis by reducing
corporate overhead, more closely integrating its Sears and
Kmart operations, and improving merchandising, supply chain and
inventory management. It also said it hopes to reduce debt and
pension obligations by $1.5 billion for fiscal 2017 through
asset sales and improving profitability and working capital
management. "We believe the actions outlined today will reduce
our overall cash funding requirements and ensure that Sears
Holdings becomes a more agile and competitive retailer with a
clear path toward profitability," stated Edward Lampert, the
embattled hedge fund manager who also serves as chairman and
chief executive officer of Sears Holdings.
Lampert’s ill-fated wager on Sears and his
steadfast commitment to the investment has defined the career
of the once-gilded hedge fund manager and former Goldman, Sachs
Elliott Management bought 580,000 shares of The Advisory
Board Company, boosting its stake in the health care consulting
firm to 8.3 percent. The multistrategy firm best known for its
activism continues to say in regulatory filings the stock is
undervalued, but has no specific plan for unlocking this value.
This situation will no doubt change in the future. Shares of
Advisory Board were unchanged on Friday, closing at $47.25.
Meanwhile, shares of Arconic, another current Elliott
activist target, surged 6 percent on Friday to close at $29.62.
The hedge fund owns 12.2 percent of the aerospace and
automotive-parts maker and has nominated five individuals to
the board of directors. As we earlier reported, Elliott
Associates was up 13.1 percent last year, making it one of the
best performing multistrategy funds.