While 2020 has been a fantastic year for retail daytraders now that Jerome Powell has lowered the IQ requirement to trade options to those of a 10-year-old, hedge funds continue to suck for the 10th year in a row, with shorts hit especially hard...
... which is why it was not a surprise that in the latest HF closure news, Bloomberg reports that once iconic Lansdowne Partners is shutting its main hedge fund in a shift away from short-selling after being hit by some of its worst-ever losses.
The London-based investment firm is closing the $2.8 billion Lansdowne Developed Markets Fund, according to a person with knowledge of the matter. Investors could withdraw their money or move it into the Lansdowne Developed Markets Long Only Fund or a new LDM Opportunities Fund, which will invest in early-stage companies, said the person, who asked not to be identified because the information is private.
And while the firm will continue to bet against companies in some of its other funds, the move marks a dramatic retreat by one of the world’s most famous equity long/short hedge funds, and comes after poor performance in both rising and falling markets. Years of poor returns have led to huge outflows from Lansdowne, its assets dropping to just $9.8 billion in June from a peak of nearly $22 billion.
According to Bloomberg, the firm’s main hedge fund - run by Peter Davies and Jonathon Regis - tumbled 13% in March’s rout, the biggest monthly decline since it started trading almost two decades ago, and was down 23.3% in the first half of the year.
The firm has told investors that it’s become harder to make money with short bets against companies, and it’s finding more opportunities in long bets and investment in early-stage companies, the person said.
Adapting to these new centrally-planned times when shorting is virtually illegal Lansdowne was already managing more money in its long-only funds than in other strategies. At the start of March, only about 45% of the firm’s assets were in long-short money pools.