(Adds details on Pershing Square, other funds' returns)
By Svea Herbst-Bayliss and Jennifer Ablan
April 2 Activist investor William Ackman, who
has spent $1 billion betting that Herbalife is a fraud,
delivered double digit returns to his investors during the first
quarter even as many rival hedge funds posted only small gains
or even losses.
In a note to investors, Ackman reported on Wednesday that
his flagship Pershing Square LP fund gained 10.7 percent during
the first quarter even after the fund slipped 0.6 percent last
month, several people familiar with his returns said. Those
people were not authorized to speak on the record.
The gains signal a dramatic comeback for one of Wall
Street's most closely-followed investors after losses at J.C.
Penney and a sharp run-up in Herbalife's stock price, which hurt
short-sellers, weighed on the $13 billion firm's returns.
Ackman has said Herbalife runs a pyramid scheme, something
the company has steadfastly denied.
Last month news that the U.S. Federal Trade Commission is
probing Herbalife sent the weight loss and nutrition company's
share price down, helping Ackman's fund. Gains on his
investments in mortgage lenders Fannie Mae and Freddie
Mac, plus Beam and Howard Hughes also
Ackman's first quarter returns stand in stark contrast to
some of his rival's more muted gains at a time the Standard &
Poor's 500 index gained only 2.37 percent.
Many hedge funds are still compiling their final numbers and
investors said they had seen on a trickle of data.
Something that hurt many hedge funds, especially tech
oriented portfolios, was a sharp sell-off in technology stocks
and some jitters over how quickly the Federal Reserve may raise
interest, analysts said.
Daniel Loeb's Third Point Offshore Fund, now waging a proxy
contest at auction house Sotheby's and perennially one
of the industry's best performers, inched up 0.9 percent in
March to end the quarter with a 3.3 percent gain.
David Einhorn's Greenlight Capital, which has a big position
in IPhone maker Apple, eked out a 0.2 percent gain in
March. But it was not enough to wipe away the year's losses
which now stand at 1.1 percent, an investor said.
When stocks including Netflix and Google
took a beating during the middle of last month, a number of
prominent funds took a beating.
John Thaler's JAT Capital Management, which owned those
companies plus Pandora Media Inc and Facebook at
the end of the fourth quarter, lost 9 percent during the month
and is now off 5.6 percent for the year, an investor said. Last
year the fund was up 30.6 percent.
Philippe Laffont's Coatue Management also owned big tech
names and lost 8.7 percent in March, leaving the fund down 7.4
percent for the year, an investor said.
Jitters about global growth also impacted trading. Global
macro fund Autonomy, which manages $3.3 billion, gained 2.08
percent last month and is up 3.3 percent for the year.
Multi-strategy firm Hutchin Hill, which oversees $1.4
billion, posted a 1.64 percent gain in March for a 5.09 percent
gain for the year, a person familiar with the number said.
Distressed investor Maglan Capital was up roughly 1 percent
in March and is up 11 percent for the year.
(Reporting by Jennifer Ablan; Writing by Svea Herbst-Bayliss;
Editing by Dan Grebler, Bernard Orr)