Paulson Leads First Half Meltdown For Hedge Funds

The first half of 2011 has been a disaster for many hedge fund managers, as a large majority of managers contained in a confidential database are in the red. One of the worst performers is John Paulson, whose Paulson Advantage Fund Limited was down 9.5 percent in June...

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It’s official. The first half of this year has been a disaster for many hedge fund managers, as a large majority of managers contained in a confidential database are in the red. One of the worst performers is John Paulson, whose Paulson Advantage Fund Limited was down 9.5 percent in June and 15.3 percent for the year-to-date.

Paulson International Fund Ltd was down 3.6 percent in June, putting it in the red by 0.8 percent for the year.

One caveat: This data is through June 28. And remember, the global markets rallied to two subsequent days.

So, there is a good chance that Paulson International and a number of others that were straddling profitability wound up eking out a gain for the first half.

Even so, the S&P 500 was up 5 percent for the first six months.

One fund whose data is available through the end of June — it is not included in this database — is David Einhorn’s Greenlight Capital. And the results were not pretty.

The value investing/opportunistic hedge fund manager poised to buy a minority stake in the New York Mets reported he lost 2.9 percent in June. This put him in the red for the quarter by 1.9 percent.

For the first half of the year, he was down 5.2 percent.

The S&P 500 was down 0.4 percent in the second quarter.

The investment returns were reported by Greenlight Re, the insurance company controlled by Einhorn. It points out that investment returns are based on the total assets in its investment account, which are managed by DME Advisors, LP and include the majority of its equity capital and collected premiums.

As of June 30, Greenlight’s largest disclosed long positions are Apple, Arkema, gold, Microsoft, Pfizer and Vodafone Group.

Apple was up 3.8 percent in the first half. However, its shares are down 7.8 percent or so since their mid-February high.

The price of gold was up 5 percent in the first half.

The worst performing hedge fund so far seems to be MLM Macro Fund Ltd, down 7.7 percent for the month through June 28 and down 22.8 percent for the year, through June 28.

As I pointed out recently, the firm started out in 1986 as a futures specialist. Its first product was an actively managed diversified futures program, according to its website. Two years later, it launched the MLM Index, which it calls the first price-based benchmark for managed futures.

The second worst performing fund this year is Altis Fund Ltd, down 20.8 percent. As of the end of May, the firm had $1.48 billion under management.

The firm was founded in 2001 with just $1.2 million in assets by Zbigniew Hermaszewski, Natasha Reeve-Gray, Alex Brunwin and Stephen Hedgecock.

The best performer among the funds in the database is Sandler Plus Offshore fund, up 10.7 percent. In fact it has made money every month since February. The fund, run by Andrew Sandler, is very small, with just $14 million in assets at the beginning of the year, according to the U.S. Offshore Funds Directory.

Of the larger funds, the GLG Emerging Equity fund was up 9.6 percent through June 28. And it has made money every month this year.

Elsewhere among well-known names:

  • Winton Capital, down 2.4 percent in June, up 0.4 percent in first half.
  • Canyon Value Realization Fund Ltd., -2.1 percent, -0.27 percent.
  • Jana Partners, -5.1 percent, 0.9 percent.
  • Third Point Fund Ltd., -2.6 percent, 1.1 percent.
  • York Fund, -2.4 percent, 1.1 percent.

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