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Point72, Balyasny led decline among large multi-strategy managers

Billionaire Steve Cohen led losses among his biggest multistrategy hedge fund peers last month as sweeping market shifts blindsided investment managers.

Cohen’s $15 billion Point72 Asset Management fell about 2%, trimming gains this year through September to more than 10%, according to people familiar with the matter. Balyasny Asset Management lost 1.4% in the month, paring year-to-date performance to about 9%. Izzy Englander’s Millennium Management fell 0.5% in the U.S. version of its main vehicle, while Ken Griffin’s $32 billion Citadel lost 0.2% in its flagship fund, trimming returns for 2019 to about 6.5% and 14%, respectively.

Early September saw a dramatic, albeit relatively short-lived, shift from long-favored momentum stocks to value equities, after signals that a U.S. recession wasn’t imminent fueled a jump in 10-year Treasury yields. The market unwind rippled across asset classes, including commodities and currencies, where investors had positioned themselves for a further downturn in the economic outlook.

Steve Cohen’s $15 billion Point72 Asset Management has fallen about 2% this year.
Steve Cohen’s $15 billion Point72 Asset Management has fallen about 2% this year.

“The rotation drew blood early in September, with a P&L scar that remains today given the rotation has stalled, but not yet reversed in full,” Mark Connors, global head of risk advisory at Credit Suisse, wrote in a Sept. 26 report.

Sculptor Capital Management, previously known as Och-Ziff, fell about 1% in its main hedge fund, bringing returns for this year to 8.7%, according to filings. Carlson Capital’s Double Black Diamond fund lost about 0.2%, paring gains for this year to 1.1%, people familiar said.

At least some managers were able to make money last month. Michael Gelband gained almost 0.4% in his ExodusPoint Capital Management, boosting returns for the year to about 4%, according to people briefed on the matter. Schonfeld Strategic Advisors gained 0.3% in September, pushing gains for this year in its main fund to 10%. Nick Maounis’s $1 billion Verition Fund Management gained 0.35% in the period, and is up 10.5% this year through Wednesday, according to a person familiar with the matter.

Narrowly focused investment strategies are a recipe for “feast or famine,” an analyst says.
September 11

Broadly, hedge funds lost about 0.1% last month, paring gains for this year to about 6.2%, according to Bloomberg Hedge Fund indexes.

While mostly beating peers, the managers are trailing benchmark stock indexes. The S&P 500 made 1.9% last month with dividends reinvested, pushing gains for this year to 21% through the end of September.

Bloomberg News