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More and more hedge funds are suffering losses as a result of recent market turmoil.
Traders say the pain that has plagued top hedge funds Melvin Capital Management and Maplelane Capital in recent days spreads, as a growing number of stocks rise sharply in short interest rates and funds face losses reduce their exposure to the long and short sides of their portfolios.
This means that funds are affected even on previously profitable bets on companies when the price of those stocks falls.
Candlestick Capital Management, a roughly $ 3 billion hedge fund from Greenwich, Connecticut, created by former Citadel portfolio manager Jack Woodruff, was on the decline between teens and teens of the year through Wednesday, said a person familiar with the fund. It was up 26% in 2020, its first year.
D1 Capital Partners, a fund that has performed well in recent years founded by former Viking Global chief investment officer Dan Sundheim, has lost around 20% for the year through Wednesday. Its large portfolio of investments in private companies protected the fund from further loss. D1 managed $ 20 billion at the start of the year.
Point72 Asset Management of Steven A. Cohen, which, along with Citadel and partners, pumped $ 2.5 billion in emergency funding into Melvin on Monday, fell about 10% for the year through the start of the week and suffered losses on Tuesday and Wednesday, people familiar with the matter said. .
Bloomberg News was the first to report on the performance of D1 Capital and Point72.
Some funds that have suffered severe losses are looking for cash inflows to help stabilize their businesses.
Maplelane, which started the year with around $ 3.5 billion and was down around 30% for the year until Tuesday, suffered further losses that took it down by around 45% for the year through Wednesday, sources close to the fund said. One of the people said Wednesday’s losses were from downsizing or reducing its exposure to the stock market. This included reducing the size of positions and exiting names to limit losses.
Maplelane is a low profile hedge fund that has rarely been marketed to investors in the past. But he has discussed raising $ 300 million to $ 500 million with potential clients, people familiar with the fund said.
The losses came during a period of frantic trading, with shares from companies such as GameStop Corp.
and AMC Entertainment Holdings Inc.
wildly higher shot. Individual investors have won for violent movements not rooted in the underlying fundamentals of companies. The rise in prices prompted bearish investors to buy back stocks they had sold short to cut their losses, pushing the stock even higher.
Write to Juliet Chung at [email protected]
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