A Closer Look at February´s Hedge Funds Returns

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Mar 18, 2015
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The $3 trillion hedge-fund industry posted gains of about 2%. According to research firm eVestment, hedge funds gained 1.93% in February. Further, according to the Barclay Fund of Funds Index, the industry gained 2.25% in February, and is up 2.14% for the year.

Almost all of Barclay’s 18 hedge fund indices had gains in February. Among them, we can highlight:

  • The healthcare and biotechnology index: +4.49%
  • Equity long bias: +4.02%
  • Event driven index: +3.57%
  • Pacific Rim equities: +2.81%
  • Distressed securities: +2.18%
  • European equites: +2.09%.

The losing strategy in February was the equity short bias Index.

Now, we are going to turn our attention to the performance of some of the best hedge funds.

Jana Partners (Trades, Portfolio)

Barry Rosenstein's founded Jana Partners, a value-oriented and event-driven investment firm. Jana Partners fund returned 6.7% in February; and is sharing the podium with other funds like Greenlight Capital, Third Point, and Pershing Square Capital.

The hedge fund reversed losses registered in the previous month; it reported a 4.6% decline in January, according to Reuters. In a year to date basis, the fund is up by 1.8% so far.

As of the end of 2014, the main large positions in Walgreens Boots Alliance (WBA, Financial), Hertz Global Holdings (HTZ, Financial), Petsmart Inc (PETM, Financial) and eBay (EBAY, Financial).

Greenlight Capital

David Einhorn (Trades, Portfolio)'s Greenlight Capital rose 3.8% in February. According to its last 13F, the hedge fund disclosed a portfolio valued at $7.52 billion in the fourth quarter of 2014.

The principal positions in terms of market value are: Micron Technology (MU, Financial), Apple Inc. (AAPL) and Sunedison Inc. (SUNE, Financial).

It is important to mention, that Einhorn added a $123.42 million position in Chicago Bridge & Iron Co. (CBI) in the fourth quarter. This stock has surged by more than 28% in February.

Third Point

The New York based hedge fund rose 4.8% in February, beating some estimates and leaving behind a volatile January.

Mr. Loeb’s top three picks held at the end of 2014 were Amgen Inc (AMGN, Financial), Alibaba (BABA, Financial) and Dow Chemical (DOW, Financial).

Pershing Square Capital Management

Bill Ackman (Trades, Portfolio)'s Pershing Square Capital Management was up 5.6% over the first three weeks of February, according to Reuters.

Mr. Ackman’s top three picks held at the end of 2014 were Allergan (AGN, Financial), Air Products & Chemicals Inc (APD) and Canandian Pacific Railway Ltd (CP).

Final Comment

As outlined in the article, several hedge funds saw stronger February returns after a troubled start in 2015 due to bad performance in January. To say the truth, hedge funds have not been able to beat the market in the latest years. We still expect this industry beats the market the upcoming year due to good results in February.

Disclosure: Omar Venerio holds no position in any stocks mentioned.