April was supposed to be, if only based on history, the strongest month for stocks. Instead, it ended up being a hedge fund bloodbath. Of the 40 or so brand name hedge funds we track, only 3 outperformed the S&P, and 33, or over 75%, generated a negative return. Which is to be expected in a month in which the highest beta stock blew up, and an entire industry which now clearly uses alpha and beta interchangeably (as long as it means following the leader right into the comfortable confines of the hedge fund hotel), is stuck with the bill.
Ironically, when we previewed the April performance we said that "while one should prepare to hear a litany of how April is historically the best month for stocks ahead of the just as infamous "Sell in May and go away" which has not been the case for the past 4 years, the reality is that this historic patterns such as this, or any others, have zero bearing on the current experiment in "confidence boosting" central planning. In other words, the only thing that continues to "matter" for risk, is what the Chairwoman may have had for dinner." The vast majority of hedge funds just found out the hard way what this means.
Here are the best and worst performers for the month:
And the full breakdown courtesy of HSBC's hedge fund performance tracker: