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The Morning Brief: Citrone’s Discovery Extends Losing Streak

Robert Citrone’s Discovery Global Opportunity Fund has picked up where it left off last year. The fund, run out of Citrone’s South Norwalk, Connecticut–based macro investment firm Discovery Capital Management, lost 3.31 percent in February and is now down 4.41 percent for the year, according to an e-mail sent to clients and obtained by Alpha.

In recent e-mails, Citrone does not directly say what caused the losses. However, in one such missive, he tells clients: “We believe that many of the major risks are off the table for the near-term, namely Greece, Russia/Ukraine, and the likelihood of a June liftoff by the Fed.” He also points out that the European central bank will start implementing its aggressive easing program in March. As a result, Citrone says he is “quite constructive on global equity markets.” He also says he remains positive on the U.S. dollar, adding that he thinks global growth “is on the verge of a small breakout.”

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The total amount of capital invested in emerging market hedge funds fell by $1.4 billion in the fourth quarter to $183.8 billion, according to a new report from Chicago-based industry tracker Hedge Fund Research. Poor performance is heavily to blame for this decline, as well as money yanked from funds with exposure to Russia. The HFRI EM: Russia/Eastern Europe Index fell 18.6 percent in the fourth quarter, pushing the full year loss to 26.5 percent. The HFRI EM: Russia/Eastern Europe Index plunged 26.5 percent last year.

For the full year, emerging markets hedge funds experienced a $13 billion increase in capital, in part due to investor inflows of $3.3 billion, according to HFR. Emerging Asia strategies took in nearly $1 billion in the fourth quarter and $3.5 billion for the full year, boosting total assets to $50.5 billion. And there were bright spots when it came to performance: The HFRI EM: India Index rose 4.2 percent in the fourth quarter and surged 42.7 percent for all of 2014.

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Jeffrey Smith’s New York–based activist hedge fund firm Starboard Value continues to reduce its stake in Tessera Technologies and now owns 4.9 percent of the semiconductor company. As a result, Starboard no longer needs to file amended 13D forms when it sells additional shares.

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Shares of hedge fund favorite Hertz Global Holdings fell 4 percent on Wednesday, to close at $22.55. Its largest shareholder is New York–based activist hedge fund Jana Partners, while other top ten holders include four other New York firms: Glenview Capital Management, Fir Tree Partners, Tiger Global Management and York Capital Management.

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