It may be hard to remember this after a decade of badly trailing the broader markets, but the ostensible purpose of a hedge fund—and the willingness of investors to pay their fees—is to produce alpha, which is to say outperformance of said market. Its absence explains the proliferation of premature obituaries, which did not account for investors’ apparently insatiable desire to pay far too much for far, far too little, and for the existential question, “What, exactly, is the point of these things?”

Well, we now have an answer. It’s not a particularly convincing one, or one with a great deal of application in a forward-looking sort of way, but all the same: Alpha apparently happens now only when a mysterious virus begins to make a great many people sick and the markets react accordingly.

“Finally, after many years, you might look at this month and say that hedge funds are doing what they are supposed to do,” said Craig Bergstrom, chief investment officer at the $7.8 billion Corbin Capital Partners, which invests in hedge funds.

Who did their job last month? Well, the odious Crispin Odey, for one. Brevan Howard managed a positive return, as well, as did Izzy Englander, Marshall Wace, Horseman Capital and a certain someone who doesn’t have to worry about being distracted from his work by a bad outing from Noah Syndergaard anymore.

Steve Cohen’s Point72 Asset Management gained almost 1% in February, amid a market rout that saw the S&P 500 Index tumble, according to people with knowledge the matter.

Even David Einhorn, whose Ackmania had been worsening, found the coronavirus panic and partial salve, and although he obviously didn’t make any money, he definitely did better than the Dow Jones Industrial Average. That, however, is the best that can be said for him.

Greenlight Capital fell 3.4% across the funds for the month, bringing losses for the year to 10.8%, according to an investor update on Friday viewed by Bloomberg. The S&P 500 Index lost about 8% with dividends reinvested…. Four out of five of Einhorn’s biggest public equity holdings as of Dec. 31 lost money in February. The sole gainer in the period was chemical manufacturer Chemours Co.

Meanwhile, some of the stocks Greenlight has bet against rose in February, including Tesla Inc. and Netflix Inc.

Speaking of Ackmania, its namesake and first sufferer also managed a market-beating loss, as did David Harding.

David Harding’s Winton Fund lost nearly 9% last week amid a coronavirus-fueled sell-off that rocked global markets.

The $7.6 billion multi-strategy fund, which uses computer-driven models to trade across asset classes, ended February down 5.7%, according to a letter to investors seen by Bloomberg.

Guess Wilbur Ross was on to something after all.

Hedge Funds Finally Do Their Job Amid Chaos of Stock Tumble [Bloomberg]
Cohen’s Point72 Hedge Fund Posts February Gain, Rising Nearly 1% [Bloomberg]
Einhorn’s Greenlight Capital Falls Amid Coronavirus Turmoil [Yahoo!]
David Harding’s Winton Hedge Fund Slumps 9% Amid Market Sell-Off [Bloomberg]

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