Hedge funds did worse in September than in any month since people began keeping track. The industry as a whole dropped -8.6%. Some high-profile firms did worse:
Maverick Capital (Lee Ainslie): -20% (-21% YTD)
Greenlight Capital (David Einhorn): -13% (-16% YTD)
Children’s Investment (Chris Hohn): -15%
Lone Pine (Stephen Mandel): -15% (-27%)
Third Point (Dan Loeb): -11% (-18%)
Atticus European: -16% (-44%)
Atticus Global: -3% (-27%)
Some funds have had to restrict redemptions so withdrawals don’t force them to liquidate more positions.
Given the general hedge-fund fee system (2% management fee and 20% of the upside), these high-water marks will bludgeon compensation across the industry. This year isn’t looking good. And if performance doesn’t improve, when the clock restarts in January, the industry may have to spend a couple of years climbing out of the current hole. Some funds will deal with this by closing their doors and returning their remaining capital to investors (and then, in some cases, reopening after changing the name on the door.