Losses from recent market turmoil affect more hedge funds.
Traders say the pain that has hit major hedge funds Melvin Capital Management and Maplelane Capital in recent days is spreading as a growing number of stocks with a significant increase in short-term interest rates and as funds they face losses they push back their exposure to the stock market long and short side of their portfolios.
This means that funds are harmed even in previously profitable bets for companies as stock prices fall.
Candlestick Capital Management, a hedge fund of about $ 3 billion, founded by former Citadel portfolio manager Jack Woodruff, fell among teenagers from mid to low during the year through Wednesday, a person said familiar with the background. It increased by 26% in 2020, its first year.
D1 Capital Partners, a fund with the best results in recent years founded by former Viking Global investment manager Dan Sundheim, fell about 20% during the year to Wednesday. Its large investment portfolio in private companies has saved the fund from a larger loss. D1 managed $ 20 billion earlier this year.
Steven A. Cohen’s Point72 asset management, which along with Citadel and its partners injected $ 2.5 billion in emergency funding to Melvin Monday, fell about 10% during the year early this week and suffered losses on Tuesday and Wednesday, people familiar with the matter said. .
Bloomberg News was the first to report on the performances of D1 Capital and Point72.
Some funds that have suffered severe losses seek inflows of money to help stabilize their businesses.
Maplelane, which started the year with about $ 3.5 billion and down about 30% during the year through Tuesday, suffered additional losses that reduced it by about 45% during the year to Wednesday, according to people familiar with the fund. One person said the losses on Wednesday came from degrading or reducing their exposure to the stock market. This included reducing the size of the position and going out of names to limit losses.
Maplelane is a low-profile hedge fund that has rarely been marketed to investors. But he has discussed raising $ 300 million to $ 500 million with potential customers, people familiar with the fund said.
Losses have occurred during a period of frantic trading, with shares of companies such as GameStop Corp.
and AMC Entertainment Holdings Inc.
shooting much higher. Individual investors have vindicated the victory of violent movements untapped from the underlying foundations of companies. Rising prices have caused bearish investors to recover shares they had sold short-term to reduce their losses, which further boosted shares.
Write to Juliet Chung to [email protected]
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