Dan Sundheim’s D1 Capital Partners, one of last year’s best performing hedge funds, lost about 20% this month through Wednesday, becoming one of the biggest victims so far, while retail investors are looking for favorite positions of hedge funds.
The fund managed about $ 20 billion earlier this year – far more than rivals like Melvin Capital and Maplelane Capital, which also suffered blows from their portfolios in the midst of the attacks. The loss of D1, described by people informed about the situation, contrasts with a gain of 60% during last year’s pandemic turbulence.
An increasing number of hedge funds, including Steve Cohen’s Point72 Asset Management, have been accounting for rapid damage to holdings amid the violent market swings this month. Cohen’s $ 19 billion company has dropped about 10% to 15% since the beginning of the year, according to people familiar with the matter. He was among Melvin’s investors and invested another $ 750 million in that company after traders targeted their short positions.
Read more: Cohen’s Point72 loses 10-15% amid the carnage of the hedge fund of the month
Behind it all are retail traders, using chat rooms and social media to coordinate attacks on popular hedge fund bets. The groups launched small pressures for stocks like GameStop Corp. and AMC Entertainment Holdings Inc., which in turn forced money managers to urgently undo bets. Hedge fund clients monitored by Goldman Sachs Group Inc. covered short positions at an almost unprecedented pace in the past two weeks.
Read more: Hedge funds reduce stock exposure at the fastest pace since 2014
Sundheim, 43, started D1 in 2018 after leaving Viking Global Investors, where he was the chief investment officer.
D1 is affected to some extent by the attacks because private companies account for about a third of its stakes, and the company has been reducing its exposure. The fund is closed to new investments and has no plans to open additional capital, said one person, asking not to be named because such decisions are confidential.
The Goldman Sachs Hedge Industry VIP ETF, which tracks the most popular shares of hedge funds, fell 4.3% on Wednesday, the worst day since September. All but one of its members were disconnected that day. Gross leverage, an indicator of hedge funds’ risk appetite that takes into account long and short positions, on Monday saw the biggest downturn since August 2019, Goldman data show.
– With the help of Zeke Faux