The Morning Brief: Top Third of Hedge Fund Managers Outperformed Bigtime in 2016
The top third of hedge funds are up nearly 15 percent this year, according to data tracker HFR. At the same time, the bottom third of performers are down about 7 percent. In 2015 the top third gained only 8.7 percent, on average, while the bottom third lost 11.5 percent.
“The nature of this performance gap will drive a substantial compensation gap,” stated a report based on compensation data from CompIQ and performance data from HFR. The report notes, for example, that a senior analyst at the top-performing funds will probably earn 2.8 times more in total compensation than a senior analyst at the bottom-performing funds. Last year pay for senior analysts at the top performers exceeded pay for the same role at the bottom ones by 1.5 times.
“This gap will increase as positions become more senior,” the report adds. For example, portfolio managers at top-performers likely could earn 6.6 times more than those at the bottom-performing funds. Last year this differential was 4.5 times. Performance differential is not as pronounced at the junior level, however.
Shares of Signet Jewelers Tuesday surged 2.15 percent, to close at $90.79, after the jewelry retailer beat third-quarter estimates and raised its full-year guidance. At the end of the third quarter the stock enjoyed the third-highest concentration of hedge fund investors, accounting for 25 percent of market capitalization.
Jeffrey Ubben’s ValueAct Capital Management sold another 4.3 million shares of Allison Transmission Holdings, cutting the activist hedge fund firms’s stake in the maker of fully automatic transmissions to 6.4 percent.
Hindustan Clean Energy, the renewable energy arm of Hindustan Power, raised $130 million in debt financing from Farallon Capital Management and Bank of America Merrill Lynch, according to crunchbase.com. The company “was in talks with the lenders for a while and closed the transaction around three months ago. It was also exploring options to sell an equity stake alongside,” according to livemint.com, an Indian business media company.
Hedge funds suffered $33 billion in outflows in the third quarter, bringing the total for the year to $67 billion, according to the calculations of data tracker Preqin. Even so, the alternatives data specialist says total industry-wide assets under management grew to $3.24 billion as of the end of the third quarter, more than other scorekeepers counted.