More hedge funds are being hit by losses from the recent market turmoil.
Traders say the pain that has plagued top hedge funds Melvin Capital Management and Maplelane Capital in recent days is spreading as an increasing number of stocks with a significant rise in short-term interest rates and as funds dealing with losses reduce their exposure to the stock market on both the long and short sides of their wallets.
That means funds are even getting hurt on previously profitable bets on companies as those stock prices fall.
Candlestick Capital Management, an approximately $ 3 billion hedge fund in Greenwich, Conn., Founded by former Citadel portfolio manager Jack Woodruff, was in the low to mid-teens from year through Wednesday, said a person familiar with the foundation. It was up 26% in 2020, the first year.
D1 Capital Partners, a top-performing fund founded in recent years by former Viking Global investment chief Dan Sundheim, was down about 20% over the year through Wednesday. Its significant portfolio of investments in private companies has protected the fund from a greater loss. D1 managed $ 20 billion at the beginning of the year.
Steven A. Cohen’s Point72 Asset Management, which along with Citadel and its partners injected $ 2.5 billion in emergency funding into Melvin Monday, was down about 10% year-round earlier this week and suffered losses Tuesday and Wednesday, said people familiar with the case.
Bloomberg News was the first to report on the performance of D1 Capital and Point72.
Some funds that have suffered severe losses are seeking an inflow of cash to help stabilize their businesses.
Maplelane, which started the year at about $ 3.5 billion and fell about 30% during the year through Tuesday, suffered additional losses that fell about 45% the year through Wednesday, according to people familiar with the fund. One of the people said that the losses on Wednesday came from the downgrading or cutting back of exposure to the stock market. That included shrinking position sizes and leaving names to limit losses.
Maplelane is a low profile hedge fund that has rarely been sold to investors in the past. But it has talked about raising between $ 300 million and $ 500 million with potential clients, people familiar with the fund said.
The losses arose during a period of hectic trading, with shares of companies such as GameStop Corp.
and AMC Entertainment Holdings Inc.
shoot wild higher. Individual investors have claimed victory over the violent movements that are not anchored in the underlying fundamentals of companies. Rising prices have prompted bearish investors to buy back shares they had sold shortly to limit their losses, driving the stock even higher.
Write to Juliet Chung at [email protected]
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