[ad_1]
Two Sigma Investments and DE Shaw, two of the biggest names in the hedge fund industry, posted losses after an army of retail investors on Reddit rocked the markets.
The coordinated short squeeze that skyrocketed the price of GameStop and other low-priced stocks in late January rocked many hedge funds by hitting some of their carefully placed bets. Melvin Capital, which lost 53% in January, is the most publicized victim, but many other funds have suffered losses, especially on bets against stocks they expected to take during the pandemic.
New York-based Two Sigma, which manages around $ 48 billion in assets and was established in 2001 by computer scientist David Siegel and mathematician John Overdeck, lost 5.3% in its Absolute Return fund and 8, 6% in its Absolute Return Enhanced fund, say people who have seen the numbers.
Two Sigma declined to comment. Its Compass macro fund and risk premium funds were roughly flat last month, one of the people said.
David Shaw’s DE Shaw, which manages around $ 27 billion, gained 0.9% in its main composite fund, but lost 2.3% in its global macro fund Oculus, according to people familiar with its performance. The firm declined to comment.
The losses mark a reversal for DE Shaw after a strong year of returns in 2020. However, like many other quantitative funds, Two Sigma has struggled in some of its funds during the pandemic.
While many hedge funds, especially those run by human traders, made big gains over the past year, many computer funds have been surprised by the sharp swings in the markets.
This year, the models of some funds that seek to exploit tiny valuation errors on hundreds of stocks have been hit hard, as retail investor interest has pushed some stocks well above previous valuations. GameStop, the focus of Redditors’ attention, climbed 1,625% last month, while BlackBerry rose 112%.
Other funds to suffer this year are Jim Simons’ Renaissance Technologies, which posted double-digit losses last year. It lost 9.5% this year at the end of January in its Institutional Equities fund, according to figures sent to investors and viewed by the Financial Times.
Overall, hedge funds rose 0.9% last month, according to data group Hedge Fund Research, although those focused on technology, or trying to balance bets on rising prices against bets on falling prices, have lost money.
(An earlier version of this story incorrectly said that DE Shaw’s composite fund lost money.)
[ad_2]
Source link