Yesterday might have crushed markets but many hedge funds are doing just fine. A fund of hedge funds manager told us they made money yesterday, meaning that a number of hedge funds were well prepared and hedged defensively. The might have flocked to Treasuries (which had a great day yesterday) before the crash.
Here’s more on who’s making money and how they’re doing it.
According to an article in Reuters, hedge funders are making money on:
- sovereign risk in France and Italy
- shorting European bank stocks
- betting against the debt of European companies in sectors such as financials, cyclicals and telecoms
- short positions on sectors such as cyclicals, telecoms and utilities would be hurt by austerity measures taken by indebted governments
- defensive positioning like they did in 2008
Here are the funds that are up this year:
- Noster Capital: +7.1% YTD (Reuters says Pedro de Noronha wrote to clients on Thursday: apart from early 2008, the fund “has never been as defensively positioned as it is now.”
- Brevan Howard’s $25 billion Master fund: +2.2% in July; +4.7% YTD
- Man Group’s flagship $23.9 billion AHL fund: +5.2% between July 4 and August 1
- Winton Capital’s flagship: +4.6% in July
- CQS’s Credit Long-Short fund: +1.64% in July, +4.71% YTD
- Alder Capital’s $630 million computer-driven Global 20 Fund: +8.8% in July
A fund of funds manager told Reuters that “a lot of people are taking bets in sovereign risk, either as protection or taking a view (on what’s going to happen)… France has definitely grown in popularity. Portugal, Ireland and Greece are quieter than six months ago. Funds have maybe moved onto the second tier of risk.”