Glenview, Other Stock Funds Jump in January: Hedge Fund Update

So much for a calm 2021. January kicked off with chaotic markets as Reddit-inspired retail investors banded together to spark a rally in beleaguered stocks that were among the most-shorted in hedge fund land.

Now, details of the damage are coming in. Melvin Capital Management took the biggest known hit thus far, sinking 53% after its aggressive and leveraged short on GameStop Corp. Maplelane Capital fell 45% through Jan. 27, Bloomberg reported. Other funds have been dragged down by the resulting broader market havoc, while some firms managed to make money.

Meanwhile, the S&P 500 fell 1.1% last month.

Key Developments:

  • Glenview among stock funds posting January gains
  • Multi-strats mostly sidestep market’s chaos
  • Einhorn’s Greenlight fell 11.1% last month
  • Fiszel’s Honeycomb dropped 4% in January
  • Renaissance’s RIEF fund slumped 9.5% last month

Glenview, Other Stock Funds Jump in January

Larry Robbins’s $3.5 billion Glenview Capital Management started the year with a 6.4% jump in its flagship hedge fund, even as some of his larger peers posted double-digit losses.

Glenview Offshore’s January return equated to about two-thirds of its gain for all of 2020, when the fund climbed 9.5%, according to a person briefed on its performance. The firm typically stays away from crowded short positions and concentrates on large-cap liquid stocks, often in the health-care sector.

Falcon Edge Capital, co-founded by Rick Gerson and Navroz Udwadia, returned 4.2% in January, another person said. The $4 billion firm, which specializes in special situations, climbed 43% in 2020.

William Heard, who runs the $325 million Heard Capital, posted gains of 3.2% in his hedge fund and 4.5% in his long-only fund, according to another person. Heard focuses on six sectors: technology, media, telecommunications, financial services, industrial and energy, generally holding his long positions for multiple years.

Representatives of the firms declined to comment.

Multi-Strategy Funds Mostly Sidestep Chaos (5:45 p.m. NY)

Multi-strategy hedge funds including ExodusPoint Capital, UBS O’Connor and Verition Group made money in January’s chaos, according to people briefed on the returns, as diversification helped protect them from volatility in the U.S. equity markets.

Michael Gelband’s $13.5 billion ExodusPoint rose 1.2% in the month, following a 13.5% return last year.

UBS O’Connor’s $2.8 billion multi-strategy fund rose 4.7% last month. The fund, which had little capital in U.S. stocks, made money in Chinese and European securities, and its global credit investments were also profitable. The fund climbed 39% last year.

The $3 billion Verition, founded by Nick Maounis, rose 1.2% in January. It scored gains on event-driven, credit, convertible bonds and long-short equity trades. Its quant portfolio was the only strategy that lost money. Last year the fund gained about 30%.

Schonfeld Strategic Advisors’s Strategic Partners fund, which invests across quant, equities and tactical trading strategies, rose 0.9% in January, according to another person. Its Fundamental Equity fund, which invests in the firm’s tactical trading strategy as well as human-run bottoms-up stock trading, fell 0.25% last month.

Some multi-strategy funds posted losses.

Citadel’s hedge funds lost 3% during the month, Bloomberg reported previously, with about one-third of the drop coming from its investment in Melvin Capital. The funds, along with founder Ken Griffin and other parters at the firm, invested $2 billion in Melvin as it moved to reposition its portfolio.

Representatives of the firms declined to comment.

Einhorn’s Greenlight Lost 11.1% (2:46 p.m. NY)

David Einhorn’s Greenlight Capital started 2021 with a loss of 11.1%, more than erasing last year’s gain.

Greenlight’s fund rose 5.2% in 2020, after a surge late in the year brought the fund into positive territory.

Einhorn, a value investor, has been waiting for years for his stock-picking style to return to favor. After a few months of positive performance, growth stocks again did better than their value brethren in January.

Homebuilder Green Brick Partners Inc., the main driver of Einhorn’s gains last year, fell 13.3% last month. And a so-called bubble basket of stocks the manager shorted late last year may have also weighed on performance. While the Nasdaq Composite Index was up slightly on the month, Tesla Inc., one of his most publicized short wagers, rose 12.5%.

A spokesman for the firm declined to comment.

Einhorn’s performance was earlier reported by Institutional Investor.

Fiszel’s Honeycomb Hedge Fund Fell 4% (12:36 p.m. NY)

David Fiszel’s $1.2 billion Honeycomb Asset Management lost about 4% last month, according to people with knowledge of the matter. That follows a gain of 58% for the Master Fund in 2020.

The fund wagers on and against stocks and also makes select private investments. Honeycomb has discussed with investors launching a long-only fund this year, the people said.

A spokeswoman for New York-based Honeycomb, which was founded in 2016, declined to comment.

Renaissance Quant Fund Slumps 9.5% (10:36 a.m. NY)

A Renaissance Technologies stock fund slumped in January, adding to the quant-investment giant’s woes after it suffered heavy losses in pandemic-hit markets.

The Renaissance Institutional Equities Fund fell 9.5% in the month, according to people with knowledge of the matter, who asked not to be identified because the information is private. That follows a 20% loss last year for the fund, which is the largest of three that the firm sells to outside investors.

A spokesman for the East Setauket, New York-based firm founded by billionaire mathematician Jim Simons declined to comment.

The setback for one of the industry’s best-known hedge fund firms underscores the continued troubles for quant firms. Their trading models were thrown off by market swings as Covid-19 battered the global economy and central banks unleashed unprecedented stimulus to contain the carnage.

Renaissance, which oversees $60 billion, has dropped out of a ranking of the world’s 20 most-profitable hedge fund firms after some of its public funds fell more than 30% last year. It’s not clear what caused the Institutional Equities Fund’s January loss, which compares with a 1% drop in the S&P 500 index.

Renaissance is best known for its Medallion fund, which is open only to employees and has annualized gains of roughly 40% over the past three decades. While Medallion employs a short-term trading strategy, the Institutional Equities Fund tends to hold its stock positions for weeks or months, trades only U.S.-listed shares and is biased toward stocks its models expect to rise.

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