November 3, 2014 / 10:15 PM / 5 years ago

Some U.S. hedge funds' losses blunted by late-month market rally

BOSTON, Nov 3 (Reuters) - A recovery on the stock markets in the second half of October helped some hedge funds bounce back from frightful losses by Halloween, with many posting declines of less than a few percent for the month and some even notching gains.

At month’s end, Larry Robbins’ Glenview Capital Management, among the industry’s most closely watched firms, reported a 0.79 percent drop for October, an improvement over a loss of around 2.5 percent earlier in the month and bringing returns to a 10.77 percent gain for the year, an investor said.

William Ackman’s Pershing Square Capital Management, which has not yet finalized monthly numbers, was off 0.60 percent for the month through Oct. 28, leaving it up 30.9 percent for the year, an investor in the private fund said.

Meanwhile, David Einhorn’s Greenlight Capital gained 2.2 percent in October, after having lost 1.3 percent in September and is up 4.9 percent in the year-to-date.

Those figures compare with a 2.3 percent gain on the S&P 500 , and a 2 percent gain on the Dow Jones industrial average - both of which had plumbed losses earlier in the month.

“As a group hedge funds performed very poorly in October,” said Adam Blitz, chief investment officer at Evanston Capital which invests roughly $5 billion in hedge funds for endowments and foundations. “But we are also seeing a wide dispersion of performance numbers with some very good ones in the mix.”

Funds that sold out of positions halfway through the month were likely hit hardest because they missed the rebound, while those that hung on had more luck, analysts and investors said.

While a sharp sell-off in mortgage companies Fannie Mae and Freddie Mac at the start of October hurt holders including Ackman’s Pershing Square, Richard Perry’s Perry Capital and Bruce Berkowitz’s Fairholme Capital, the beating had been blunted by month’s end when some of the losses were pared.

Other factors including stronger U.S. growth numbers and fresh financial help from Japan’s central bank also helped many funds sit on favorable reversals as the Dow Jones industrial average hit a record high on Oct. 31.

Oxford Asset Management ended the month up 1.36 percent after being down 6 percent earlier in October, an investor said. It is up 0.76 percent for the year.

Even Robert Citrone’s Discovery Capital Management, whose flagship fund was off roughly 10 percent halfway through the month, ended October down only 5 percent.

Many managers are finalizing month-end numbers but preliminary industry data already points to more losses. Hedge Fund Research’s HFRX index already shows a 1.65 percent drop in October. The research firm is scheduled to release its more comprehensive industry performance data on Friday.

The main fund of Barry Rosenstein’s Jana Partners lost 2.1 percent last month, leaving it with only a 0.3 percent gain for the year, according to an investor. (Editing by Matthew Lewis)

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