The Japanese stock market dropped more than 6 percent on Thursday and is now in bear market territory. It is off 20.4 percent from its recent high, but still up 19.7 percent year-to-date. It is also up 44.9 percent over the past year but still down 55.6 percent from its 25-year high, according to Howard Silverblatt of Standard & Poor’s. Meanwhile, the Japanese yen has rebounded sharply against the U.S. dollar. It will be interesting to see how the non-macro hedge fund players like Third Point have been affected by this abrupt reversal in trend. It also raises questions about the future of the so-called carry-trade.
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Questions are being raised again over whether Pershing Square’s William Ackman is being squeezed out of his Herbalife short. The stock rose more than 3 percent on Thursday to close at $46.81. Shares of the controversial seller of nutrition supplements are up 42 percent this year alone and a whopping 77 percent from their December bottom after the hedge fund manager went public with his short position.
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Hedge funds took in just $430 million in April, nearly half the $817 million invested in March, according to data providers BarclayHedge and TrimTabs Investment Research. The firms said the data is based on reporting from 3,393 funds. The data suggests that investors are becoming a little concerned about these funds given their underperformance over the past few years.
Even so, investors still seem interested in start-up funds. According to Chicago-based industry tracker Hedge Fund Research, 297 hedge funds were launched in the first quarter, the third highest quarterly launch total since the beginning of 2008. In the first quarter of 2012, 304 new funds hit the market, while in the first quarter of 2011, 298 funds debuted. Meanwhile, the number of hedge fund liquidations dropped to 196 in the first quarter of this year compared with 211 and 238 in each of the prior two quarters, respectively. Interestingly, many of the new funds are charging much lower fees than in the past. For example, the average management fee for funds launched in the first quarter was 32 basis points lower than for funds launched in 2012, while average incentive fee was 17.43 percent, down from 17.74 percent for 2012 launches.
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Activist hedge fund firm Starboard Value said in an amended 13F filing that it owned 2.4 million shares of Nvidia, maker of graphics chips, at the end of the first quarter. Filings detailing holdings for the March three-month period were due by mid-May. Investors can obtain an extension for filing this form so they can continue building their position without disclosing their actions.
