Dan Sundheim’s D1 Capital Partners, one of last year’s top-performing hedge funds, lost about 20% this month through Wednesday, making it one of the biggest casualties ever as retail investors focus on hedge funds’ favored positions .
The fund was managing about $ 20 billion when this year began – far more than rivals such as Melvin Capital and Maplelane Capital who also took blows to their portfolios during the attacks. The loss of D1, described by people briefed on the situation, contrasts with a 60% gain during last year’s pandemic unrest.
A growing number of hedge funds, including Steve Cohen’s Point72 Asset Management, have recorded rapid damage to holdings this month amid wild market swings. Cohen’s $ 19 billion business is down about 10% to 15% since the start of the year, according to people with knowledge of the case. It was one of the investors in Melvin, plowing an additional $ 750 million into that company after traders targeted its short positions.
Read More: Cohen’s Point72 Loses 10-15% Amid the Month’s Hedge Fund Carnage
Behind it are retailers who use chat rooms and social media to coordinate attacks on popular hedge fund bets. The groups have launched short squeezes for stocks such as GameStop Corp. and AMC Entertainment Holdings Inc. who, in turn, have forced money managers to run down the bets urgently. Hedge fund clients followed by Goldman Sachs Group Inc. have been covering shorts at an almost unprecedented rate for the past two weeks.
Read more: Hedge funds are decreasing equity 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 plagued to some extent by the attacks as private companies represent about a third of its assets and the company has reduced its exposure. The fund is closed to new investment and has no plans to open additional capital, said one of the people, who asked not to be named as such decisions are confidential.
The Goldman Sachs Hedge Industry VIP ETF, which tracked the most popular hedge fund stocks, plunged 4.3% on Wednesday for its worst day since September. All but one of the members were down that day. Gross leverage, a measure of hedge fund risk appetite that takes long and short positions into account, saw its largest active decline since August 2019 on Monday, Goldman data shows.
– With the help of Zeke Faux