This content is from: Portfolio
The Morning Brief: Investors Chase Performance After All
Here is some evidence hedge fund investors like to chase performance when choosing which fund to invest in. According to a new study released by London-based Preqin, 53 percent of hedge funds that posted gains of 5 percent or more in 2015 received inflows, compared with 39 percent for funds that were flat to up 4.99 percent, 32 percent for funds down less than 5 percent and just 25 percent of funds that were down more than 5 percent. In 2016 the pattern remains the same. According to the report, 46 percent of funds up 5 percent or more in the first three months received inflows, while a decreasingly percentage of funds in the other three performance groups received inflows.
Drilling further down, in the first quarter funds gaining more than 5 percent only received 3 percent net inflows after adjusting for redemptions. However, the other three performance groups suffered net redemptions.
The Preqin study also showed an increasing number of pension funds investing in hedge funds despite recent high-profile defections from the asset class. As of the end of the first quarter, 282 active U.S.-based public pension funds held investments in hedge funds, up from 276 at year-end, 269 the previous year and 254 in both 2012 and 2013. In addition, in each of the past few years the average allocation to hedge funds by pension funds has been trending up, to 9.2 percent as of the end of the first quarter.
Wow! What a two-day period for the Perceptive Life Sciences fund, managed by New York–based Perceptive Advisors. Shares of Minerva Neurosciences surged 233 percent on Thursday after the company announced upbeat results from a clinical trial of its antidepressant drug and also disclosed positive results for a schizophrenia drug. Perceptive is the company’s fourth-largest shareholder, even though the stock is a small holding of the New York hedge fund firm. Just on Wednesday, shares of Perceptive’s third-largest position, Sarepta Therapeutics, surged 26.6 percent.
Shares of Sears Holdings surged 6.55 percent, to close at $13.34, after the crumbling, once-gilded retailer announced yet another horrible quarterly loss and that it raised more than $1.2 billion from two different loans. However, investors apparently are excited that the retailer controlled by ESL Partners’ Eddie Lampert said it is “evaluating potential partnerships or other transactions” with its prized Kenmore, Craftsman and DieHard brands and its Sears Home Services businesses. The stock is now up 25 percent over the past six trading sessions. Even so, the stock is still down about 35 percent for the year.
Leon Cooperman’s Omega Advisors roughly tripled its stake in Resource America, to 2.264 million shares, or 10.87 percent of the total outstanding. Resource America is an alternative asset management company that specializes in real estate and credit investments.