As previously noted, it has been a bad year for some of the marquee hedge fund names, with Einhorn's Greenlight Capital down 21% YTD, and as reported last night, Ackman's Pershing Square is not doing much better and as of November 30, was down 20.8%.
On the weekly table one can clearly see when Pershing's fortunes turned in mid August when the fund dropped from being up 11% for the year to going negative for the year on the heels of the collapse in Valeant shares.
Perhaps yesterday's rebound in Valeant shares provides some modest breathing room for Ackman, whose portfolio is increasingly becoming a levered bet on the fate of this one company. However, even if outside investors wanted to cash out they may have limited options: according to Bloomberg [8], "certain investors in Ackman’s Pershing Square Capital Management can only take out one-eighth of their money every quarter, meaning it takes two years to exit completely. At the end of 2014, those restrictions applied to clients accounting for about a third of the firm’s $18 billion. About another third was permanent capital from a share sale last year."

Other hedge funds are not faring much better: as reported yesterday, the iconic BlueCrest hedge fund returned the bulk of its money to outside investors, which however as Bloomberg writes had already been in the works with investors previously pulling billions of dollars forcing assets to shrink by more than 40 percent this year to $7.9 billion, "mostly from withdrawals after years of lackluster returns in what was once its biggest fund. New Jersey’s public pension plan decided to pull $284 million from one international fund as of June 30, citing “disappointing” returns just over a year after adding to its investment."
Bloomberg adds:
Hedge fund investors are losing patience even with marquee firms as many of them struggle this year, especially those that offer macro strategies or stock funds heavily weighted to rising shares. Some managers have lost money for two years running, while others such as David Einhorn’s Greenlight Capital are suffering declines that rival their worst year. After the weakest third-quarter inflows in six years, the industry could see outflows in the fourth quarter, said investors and bankers who watch the ebb and flow of hedge fund assets.
Other marquee names are so far holding in:
Och-Ziff, run by Dan Och, saw $4.2 billion leave its $30 billion multistrategy funds in the first nine months of 2015. Its biggest fund is little changed this year. The firm could face more withdrawals in 2016, depending on the outcome of an investigation by the U.S. Justice Department into whether it broke bribery laws in accepting an investment from the Libyan Investment Authority. Och-Ziff has told investors the matter is likely to be resolved next year, according to a person briefed on the matter.
As central planning continues to wreak havoc on traditional analysis and trading, expect many more multi-billion hedge funds to shutter in a world in which "hedging" is unnecessary as the central banks have effectively onboarded all market downside risk. This also means that being long the most hated stocks by hedge funds remains one of the best performing trades as unwinds, either forced or through liquidations, will continue to lead to squeezes among the most shorted names, a strategy previously profiled two weeks ago [9].




