Marshall Wace Long-Short Fund Reports Record Loss

(Bloomberg) -- A Marshall Wace hedge fund that bets on rising and falling stocks slumped to a record loss in January, as the U.S. market was shaken by a short squeeze driven by retail investors.

The $4.4 billion MW Global Opportunities Fund fell by an estimated 7%, the biggest monthly decline since it started in 2009, according to an investor letter seen by Bloomberg. That compares with an average loss of 5.9% for a group of long-short hedge funds tracked by Goldman Sachs Group Inc., and a drop of about 1% for the S&P 500.

A spokesperson for Marshall Wace, one of Europe’s largest hedge-fund firms, declined to comment.

London-based Marshall Wace, which manages about $52 billion, joins stock-pickers such as Eminence Capital and Whale Rock Capital Management in losing money as a Reddit-fueled trading surge roiled markets. Melvin Capital was hit particularly hard, plunging 53% as retail investors lifted some of the stocks most shorted by hedge funds.

Read More: Mudrick Wins, Eminence Drops as Reddit Rout Hits Hedge Funds

It’s not clear how the MW Global Opportunities Fund run by Fehim Can Sever lost money. It gained 18.5% last year, and has posted only one annual loss -- down 0.7% in 2016 -- since it opened.

Marshall Wace’s flagship MW Eureka fund lost an estimated 1.5% in January, the investor letter shows. The firm’s MW Market Neutral TOPS fund gained about 3.8%.

Marshall Wace typically avoids wagering against companies where short interest is more than 10% or liquidity is low and volatility high, according to a person with knowledge of the matter, who asked not to be identified because the information is private.

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