The time has come, alas, to admit that we were wrong. Reports—ours and others—of the demise of the hedge fund industry have proven greatly exaggerated. For while we remain skeptical that President Trump will Make Coal or Manufacturing or Infrastructure Great Again, he has certainly given the paper-pushers he’s stocking his administration with some refreshing gale-force winds at their backs and revived their animal spirits within.
As the year draws to an end, the industry’s gotten an unexpected pick-me-up. The ripple across markets from the surprise victory of U.S. President-elect Donald Trump bolstered returns -- reversing the fortunes for some -- and may prove to be a boon going forward. With his policies expected to increase interest rates, produce a wider dispersion in earnings across industries and trigger more merger activity, hedge funds may soon be put back to work….
Hedge funds betting on macroeconomic trends had one of the worst-performing strategies in 2016, the volatility spurred by Trump’s win changed the course for managers such as Brevan Howard Asset Management and Rubicon Fund Management. Brevan Howard’s master fund rallied in November, erasing earlier declines and bringing returns for the year to 2.8 percent, an investor letter shows. Rubicon’s Global Fund surged 21 percent last month, returning it to a profit of 2.2 percent from a loss, a person familiar with the matter said.
Impressive as those turnarounds have been, breaking even after losing a few billion isn’t enough for some. So, on the verge of a second down year in a row, you’ll forgive York Capital Management’s Jamie Dinan if he lacks the exuberance of a Louis Bacon, who like Dinan is down about 1% but is popping the Champagne over it.
“We need to do a better job and make everyone some money,” Mr. Dinan, 57 years old, said at that meeting….
Mr. Dinan is taking steps to retrench at York, where assets under management have slumped to $17 billion this year, down 35% from $26 billion last year.
He has doled out fee discounts to big investors. He has stopped naming new partners, and has met with division heads to identify staff cuts….
The flagship’s executives are putting stricter limits on “crowded trades,” in which hedge funds own more than 20% of a company’s shares, said a person close to the firm.
Mr. Dinan, a baseball fan, told investors on a recent conference call that York would supersize “fat pitch” bets they think are particularly attractive, as the firm did with a third-quarter wager on biotech company Medivation being acquired.