The Morning Brief: Hedge Fund Assets Back Above $3 Trillion

Total hedge fund industry assets are back above the magic $3 trillion mark for the first time this year, according to a new report from data tracker eVestment. Assets stood at $3.015 trillion as of the end of May. Of course, given the huge market volatility in June, performance losses could send assets below that mark when the next monthly data comes in. In any case, it seems investors have pumped more money into hedge funds than they have redeemed in three of the past four months.

“The redemption pressures from last year’s underperformers is abating as new money continues to come in to those who did well in 2015,” the report states.

Commodity funds remain popular while investors removed money from Europe ahead of the Brexit vote. This year investors have redeemed about $83 billion from funds that underperformed in 2015, but added $74 billion to funds that produced gains in 2015. Event-driven funds seem to be having a particularly tough time. According to eVestment, in the past 1.5 years through May, investors have redeemed $45.1 billion from the various event-driven strategies. In fact, the broad group has now suffered six straight monthly outflows. Activist funds, which are a subset of the event-driven universe, experienced net inflows of $73 million in May, but for the year have suffered nearly $2 billion in redemptions.


Elliott Management Corp. said it boosted its economic exposure in Lifelock to 9.9 percent of the shares outstanding. Earlier this month, the New York hedge fund firm said shares of the Tempe, Arizona-based identity theft protection company were undervalued, and it has started to speak with its management team and board of directors about “opportunities to enhance shareholder value.” Incredibly, the stock is up about 31 percent just since it closed on May 20, the day before Elliott said it started to significantly buy shares.



The Alaska Permanent Fund Corp., the state’s $53 billion wealth fund, said it plans to redeem its $2 billion investment in funds of hedge funds. Instead, it plans to pick individual hedge funds on its own, according to a Bloomberg report. It currently is closing out investments with Crestline Investors, Mariner Investment Group and Lazard Asset Management, according to the report, citing Marcus Frampton, director of the Alaska fund’s private markets.

“We now have the depth of staff and this is an area we want to have some focus on and we are set up to do it directly,” Frampton told the wire service in an interview. He said he will also be able to cut a layer of fees that typically go to the fund of funds. He did concede the funds of funds did “a very good job” and “no worse than the industry.”


Talk about boosting a stock price. Hedge fund manager Edward Lampert bought about 335,000 shares of Dodgeville, Wisconsin-based Lands’ End for between $15 and $16 per share. The hedge fund manager personally owns about 11.74 million shares of the retailer, while his hedge fund firm, Bay Harbor, Florida-based ESL Investments, controls a little more than 6.7 million shares. Shares of Lands’ End surged 5.66 percent to close at $16.61.


Shares of pharmaceutical company Esperion Wednesday plunged 40 percent after the Ann Arbor, Michigan company reported a setback in the development of its anti-cholesterol pill. Several hedge fund firms rank among its top shareholders, including Evanston, Illinois-based Pentwater Capital Management and South Norwalk, Connecticut-based Discovery Capital Management.


Shares of Toronto-based SunOpta fell nearly 4 percent after the organic foods company said it hired Rothschild to review its operating plan and “evaluate a complete range of strategic and financial actions.” The company said the decision arose from recent meetings with many of its largest shareholders, including New York-based Tourbillon Capital Partners, its largest investor.