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Morning Brief: Biggest Hedge Funds Underperform Industry Gains This Year

The 10 largest hedge funds have returned 2.85 percent this year through August, according to eVestment.

  • By Stephen Taub

The average hedge fund gained 0.74 percent in August, bringing this year’s gains to 5.47 percent, according to an eVestment report. But the largest hedge funds are mostly underperforming the industry average. Three-quarters of hedge funds tracked by the data provider are up nearly 10 percent, while the 10 largest hedge funds have returned just 2.85 percent year to date. Emerging markets funds are leading the way this year. Brazil-focused funds were the top performers in August, gaining 5.34 percent. They are now up 16.88 percent for the year. China-focused funds are the top performers for the year, rising 23.02 percent after last month’s 2.69 percent gain. India funds cooled off a bit in August, gaining just 0.13 percent. However, they are still up 22.77 percent for the year.

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Elliott Management has moved on to a new target, this time squaring off with private-equity firm KKR & Co. The activist hedge fund said it owned a little more than 5 percent of Hitachi Kokusai Electric, according to Reuters. In April, KKR agreed to acquire the chip-making equipment and video services business from Hitachi for about $2.3 billion. Under the deal, KKR would buy as much as 48.33 percent of the company and Hitachi Kokusai would repurchase the remaining shares held by Hitachi. However, the deal was stalled when a third-party committee said the deal’s terms could be disadvantageous to minority shareholders, according to the Reuters report. In stepped Elliott. “We are encouraged by the company’s recent business success and the board’s efforts to safeguard shareholders’ interests through the establishment of the third-party committee,” Elliott reportedly said in a statement. Elliott is a multi-strategy hedge fund best known for its activism. It is also one of the most active agitators of companies outside the U.S.

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Viking Global Investors disclosed in a regulatory filing that it owns more than 2.9 million shares of aTyr Pharma, or 9.5 percent of the company. The investment is relatively inconsequential for Viking, as aTyr Pharma’s market value is just $79 million. ATyr Pharma is concentrating on developing drugs to treat people with grave maladies.

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The Managed Funds Association has named three new members to its executive management team: Peter Donovan will serve as chief operating officer and Lou Costantino Jr and David Landers will serve as managing director for government relations.

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