More hedge funds are being affected by losses in the recent market turmoil.
Traders say the pain that has plagued major hedge funds Melvin Capital Management and Maplelane Capital in recent days is spreading, as an increasing number of stocks with a significant increase in short interest and funds that deal with losses reduce their exposure to the stock market in both markets long and short sides of their portfolios.
This means that funds are being undermined even with previously profitable bets on companies, as the prices of these shares fall.
Candlestick Capital Management, a nearly $ 3 billion hedge fund in Greenwich, Connecticut, founded by former Citadel portfolio manager Jack Woodruff, fell in his eighteen years until Wednesday, said a person familiar with the bottom. It was a 26% increase in 2020, its first year.
D1 Capital Partners, a high-performing fund in recent years founded by former Viking Global chief investment officer Dan Sundheim, fell about 20% in the year through Wednesday. Its substantial portfolio of investments in private companies protected the fund from further loss. D1 managed $ 20 billion at the beginning of the year.
Steven A. Cohen’s Point72 Asset Management, which together with Citadel and its partners injected $ 2.5 billion in emergency financing into Melvin on Monday, fell about 10% in the year to the beginning of this week and suffered losses on Tuesday and Wednesday, people familiar with the matter said.
Bloomberg News was the first to report the performances of D1 Capital and Point72.
Some funds that have suffered severe losses are seeking cash flows to help stabilize their companies.
Maplelane, who started the year with about $ 3.5 billion and fell about 30% in the year through Tuesday, had additional losses that reduced her by about 45% in the year through Wednesday, said people familiar with the bottom. One person said the losses on Wednesday resulted from the degradation or reduction of his exposure to the stock market. This included reducing the size of positions and leaving names to limit losses.
Maplelane is a discreet hedge fund that has rarely marketed to investors in the past. But he discussed raising between $ 300 million and $ 500 million from potential customers, said people familiar with the fund.
The losses came during a period of frantic trading, with shares from companies like GameStop Corp.
and AMC Entertainment Holdings Inc.
shooting wildly higher. Individual investors claimed victory for the violent movements unrelated to the underlying fundamentals of companies. Rising prices led pessimistic investors to buy back shares they had shorted to cut their losses, pushing stocks further up.
Write to Juliet Chung at [email protected]
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