June was a bad month for most hedge funds. With China crashing, oil prices resuming their slide, volatility returning, and even momo favorite biotechs no longer rising at their conservative 10% monthly clip, few looked forward to writing their monthly investor letters, and nowhere was the carnage more indicative than in our favorite named hedge fund, the Tulip Trend Fund, which after soaring earlier in the year tumbled 15% in June and is now down almost 20% for the year.
Yes, June was not a good month for trends, or tulips, but some other strategies did work: conservative coupon clipping worked for Canyon which was among the best performing funds, as did those HFT silos for Millennium up 1.3% in June and with an AUM of a staggering $30 billion according to HSBC.
For the year, the story is somewhat different, and while June was a month to forget, most prominent names have outperformed the S&P with the best performer among our universe of names being the Russian Prosperity Fund, outperforming both Bill Ackman and Hugh Hendry, whose Elcetice has staged an impressive turnaround after several disappointing years.
But perhaps the most interest observation in the latest weekly HSBC report of Hedge Fund performance is that quietly, under the covers, there has been a substantial "rebalancing" taking place as many of the hedge funds that were underperforming substantially earlier in the year, and were submitting their P&L to HSBC, have quietly withdrawn their submissions or simply haven't updated their returns in months: names like Bluecrest, Perry, Eminence, Fortress and Armajaro.
Hardly surprising then that when you not only exclude all the worst performers, but don't show them in the first place, the YTD returns are quite impressive for what is left of the group as a whole when the bulk of the "Bottom" performers mysteriously disappear...