[Third Point founder Dan Loeb’s] offshore fund climbed 25.7% through November and his top three money-makers were companies that Third Point invested in while they were still private and then went public within the past 13 months: Upstart Holdings Inc., SentinelOne Inc. and Rivian Automotive Inc.

Dan Sundheim’s D1 Capital returned 17% through November in a fund that can invest as much as 35% of its assets in private companies. It would have struggled without them.

And struggle his non-p.e.-players did, especially toward the end of the year, with November clocking in as the industry’s worst month since the coronavirus pandemic broke out in March 2020, and hedge funds desperately selling off bad bets to cut risk by the time the ball dropped. All told, the average hedge fund managed about an 8% return in 2021, just a couple thousand basis points behind the broader markets.

This was the fate of the world’s largest hedge fund, for instance, although given how things looked a month ago, an 8.14% return for a fund that’s averaged an annualized 1.6% over the past decade looks like an unqualified triumph.

Ray Dalio’s Bridgewater Associates posted a December return of 7.8% through Wednesday for its flagship hedge fund and is now poised to book its best annual performance since 2018, after a lackluster 11 months…. The S&P 500 gained 5% this month through Wednesday and is trading near a record high, and European stock indexes also advanced. Bridgewater could have taken profits on bets that the yield-curve would flatten following mid-December’s Federal Reserve meeting -- a trade that has been popular among fixed-income investors since May.

What’s more, the winds of change are once again whipping through the bewitched woods of Westport and chilling its tented residents, making money matters somewhat of a secondary issue.

The firm has established a so-called operating board of directors, replacing a group that had been serving less formally since Dalio stepped down as chief executive officer in 2017. It also added three new independent members to the board earlier this year…. The group already has plenty to do, starting with the likely search for a successor to McCormick, who’s raising money for a probable run as a Republican candidate for the U.S. Senate in Pennsylvania….

Dalio, 72, has said he wants to begin the “third phase” of his life. He’s still interested in managing money at Bridgewater but no longer wants to be encumbered by the responsibilities of running the $150 billion firm. McCormick’s decision to explore a future in politics has complicated that handover.

David Shaw isn’t worrying about such things, having handed off day-to-day management of his eponymous hedge fund to focus on computational biochemistry some years ago. But then again, he doesn’t have to worry about turning things around returns-wise, either.

The flagship Composite Fund rose 18.5% on the year, according to a person with knowledge of the matter, placing it among the top performing multistrategy funds. The vehicle, which invests across asset classes and geographies, is D.E. Shaw’s largest, the person said, and has posted just one down year since its debut two decades ago.

The firm’s Oculus Fund, which mostly makes macro investments, gained 15% last year, the person said, making it a standout while many peers in the strategy were tripped up by tumultuous Treasury markets. Oculus is the firm’s second-biggest fund, according to the person, and hasn’t posted an annual loss in its 16-year history.

Bridgewater Gains 7.8% in December as One Big Month Saves Year [Bloomberg via Yahoo!]
Bridgewater Boosts Board’s Clout for Life After Dalio, McCormick [Bloomberg]
D.E. Shaw’s Two Biggest Funds Post Double-Digit Gains for 2021 [Bloomberg]
Hedge Funds Protect Wealth Despite Having Their Worst Month Since March 2020 [Forbes]
Hedge Funds Kick Risk Addiction at End of Crazy Year for Stocks [Bloomberg]
Hedge funds ride wave in volatile year for shipping costs [FT]
Hedge Funds Salvage 2021 Gains as Private Investments Shine [Bloomberg]

With GameStop Corp. falling as much as 68%, the most-shorted shares lost 9% in its sharpest drop since March, paring gains this month to 39%, a Goldman Sachs Group Inc. basket shows. Meanwhile, an exchange-traded fund tracking hedge funds’ favorite names (GVIP) jumped 4%.... Thursday’s reversal still looks minor relative to this week’s seismic moves spurred by day traders besieging the popular positions of the smart money. But the shift in trading fortune may signal a peak in deleveraging pressures on the institutional crowd….

“Those worries in relation to hedge funds have faded,” wrote David Madden, an analyst at CMC Markets, in a note. Restrictions on trading apps have “helped bring down the fear factor as the battle won’t be as intense now,” he added.

Which is a strange way of predicting that GME would almost immediately soar $150 by lunchtime, but they did close the day below $200, with that big assist from Robinhood, et. al. Still, the damage was definitely done, and there’s carnage to be counted. So let’s do that.

Morgan Stanley said in a note to clients that Monday and Tuesday were among the top five heaviest days for so-called de-grossing over the past decade. Funds have not only been covering their short positions — the bets they placed against individual shares — but also selling shares in companies to cut their leverage and reduce their gross exposure to the market.

Goldman Sachs said Monday saw the largest unwinding in equities by hedge funds since August 2019.

Viking Global Investors, Andreas Halvorsen’s $44 billion firm, is down about 7% so far this year in its hedge fund, according to a person familiar with the matter.

Cohen’s Point72 Asset Management declined 10% to 15% so far this month, while Sundheim’s D1 Capital Partners, one of last year’s top-performing funds, is down about 20%. Melvin Capital, Plotkin’s firm, had lost 30% through Friday…. Jack Woodruff’s $2.8 billion Candlestick Capital has fallen 10 to 15% in January on its short wagers, while the $3.5 billion Maplelane Capital lost about 33% through Tuesday in part because of a short position on GameStop, according to investors. By end of day Wednesday, Maplelane was down 45%.

Mets fans, meanwhile, can’t believe it’s happening again.

“Explain to me like I’m 5 with what’s going on with GameStop/amc and how will this affect the Mets,” a Twitter user named @Metsochist4Life wrote.

A user named @AreolaBorealis wrote directly to Cohen saying: “Is this Gamestop business [affecting] the Mets payroll? I mean that’s the main story in all of this.”

Cohen replied: “Why would one have anything to do with the other?”

Earlier Cohen — who’s gone from being the billionaire behind the curtain to interacting with people on Twitter — suggested that he’s been getting it from all sides in the wake of his Melvin investment.

“Rough crowd on Twitter tonight. Hey stock jockeys keep bringing it,” he wrote.

Well, Big Guy, one such self-appointed stock jockey did just that.

“PRISON TIME,” [Barstool Sports founder Dave] Portnoy said in a tweet that linked to Cohen, founder of Point72 Capital, as well as Citadel, a hedge fund run by billionaire Ken Griffin./“Dems and Republicans haven’t agreed on 1 issue till this. That’s how blatant, illegal, unfathomable today’s events are. It also shows how untouchable @RobinhoodApp @StevenACohen2C Citadel Point72 all think they are. Fines aren’t enough. Prison or bust.”

Cohen snapped back: “Hey Dave , What’s your beef with me. I’m just trying to make a living just like you.Happy to take this offline.”

“I don’t do offline. That’s where shady s*** happens,” Portnoy said.

He then accused Cohen of having a hand in controversial restrictions on trading apps like Robinhood that are hurting novice investors behind the spectacular rally in small stocks like Gamestop…. “I think you had strong hand in todays criminal events to save hedge funds at the cost of ordinary people. Do you unequivocally deny that?,” Portnoy said….

Cohen defended himself saying, “What are you talking about? I unequivocally deny that accusation. I had zero to do with what happened today…chile out.”

Portnoy continued: “Then in your professional option why was trading halted on $amc $gme $nok $sndl $nakd ? I’d be very curious?”

“Good question,” Cohen shot back. “Those questions should be directed at Robin Hood etc. I’m a trader just like your like you are . When you find out give me a holler.”

(And don’t worry, Mets fans: Thornton says everything’s going to be just fine.)

Sources tell The Post that most of Cohen’s pain is coming from his investment in Melvin Capital, a fund run by his former protege Gabe Plotkin, which became the first high-profile victim of the social media-fueled market revolt against hedge funds who make billions by shorting stocks…. “If he’s bailing out Plotkin I’m not too concerned for him,” a fellow hedge fund manager said of Cohen. “Plotkin didn’t have adequate risk management for something he couldn’t have seen coming and Steve got hit by a guy who made him billions two years ago. It sucks but he’ll get over it.”

Plus, he’s got too much studying to do.

In the past few days numerous institutions and large hedge funds have been in touch asking for additional real-time data about discussions happening on Reddit forums, said James Kardatzke, Quiver chief executive and co-founder…. The head of one of the world’s biggest hedge fund firms told the Financial Times it was planning to start using natural language processing to scour forums such as Reddit to avoid being caught in pile-ons against negative bets. “Reddit is definitely a risk management issue. It’s at the top of our agenda,” the person said.

Leon Cooperman? Not so much. He’s retired, and therefore free to indulge in his favorite pastime: Cranky recriminations on television.

“The reason the market is doing what it’s doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates. I’m not saying they’re stupid. Show me a guy with a good record consistently, and I’ll show you a smart guy….”

“I hate that expression with a passion,” said Cooperman, who has said he voted for Biden in the November election despite disagreeing with him over certain economic issues, such as taxes…. “I’m willing to work six months a year for the government and six months for myself, which means a marginal tax rate of 50%,” said Cooperman…. “This fair share is a bullshit concept. It’s just a way of attacking wealthy people, and I think it’s inappropriate,” Cooperman said Thursday. “We’ve all got to work together and pull together.”

Hedge funds retreat in face of day-trader onslaught [FT]
Hedge Funds Slashing Equity Exposure at Fastest Pace Since 2014 [Bloomberg]
Hedge-Fund Titans Lose Billions to Reddit Traders Running Amok [Bloomberg]
Hedge Fund Maplelane Loses About 33% on Short Bets This Month [Bloomberg Quint]
Viking Hedge Fund Down About 7% in Stock Market Tumult [Bloomberg]
Hedge Funds’ Trades Are Working Again After Worst Day in History [Bloomberg]
Mets fans worried over Steve Cohen’s GameStop involvement [N.Y. Post]
Mets owner Steve Cohen can’t escape GameStop stock fallout amid Reddit revolt [Thornton/N.Y. Post]
Steve Cohen and Dave Portnoy feud over GameStop on Twitter [Thornton/N.Y. Post]
Hedge funds rush to get to grips with retail message boards [FT]
Leon Cooperman on GameStop Reddit speculators: ‘I’m not damning them’ but it will ‘end in tears’ [CNBC]