Hedge Crunch Financial

Recent data highlights a continued trend of smaller and mid-sized hedge funds outperforming their larger counterparts across several performance metrics. In 2023, funds managing under $1 billion posted strong double-digit gains, with macro and event-driven strategies delivering particularly strong results. This performance has drawn attention to the agility of smaller managers and their ability to exploit niche opportunities.

Year-to-date in 2025, mid-sized hedge funds—those with assets under administration (AUA) between $500 million and $3 billion—have led industry returns. According to Citco, these funds returned 0.3% in February 2025, while larger funds managing over $3 billion posted a weighted average return of -0.6%, highlighting increased volatility among the largest players.

Investor sentiment appears to be shifting in favor of smaller funds. IG Prime reports that 40% of investors exploring reallocations expressed interest in smaller managers, citing concerns over performance and risk management at larger firms.

Despite net outflows of $1.4 billion in January 2025, sub-$1 billion funds continue to attract attention due to their strategic flexibility and focus. Meanwhile, some large multi-strategy firms maintain their dominance through scale, allocating billions to external managers.

Overall, the performance and positioning of smaller hedge funds underscore a broader shift in industry dynamics, with adaptability becoming a key competitive advantage.

Veteran hedge fund manager Richard Perry is making a comeback after closing Perry Capital in 2016. The 70-year-old investor has joined Olympus Peak Management, a distressed credit firm founded in 2018 by his protégé Todd Westhus.

Perry, Westhus, and Matt Englehardt, another former Perry Capital executive, have started raising a new distressed fund, targeting a $500 million cap. The trio will oversee the investment committee. Perry’s return comes after a distinguished career in hedge funds, having launched Perry Capital in 1988 following his tenure at Goldman Sachs. His firm once managed $15 billion and rarely posted losses until its final years.

Westhus played a pivotal role in Perry Capital’s most lucrative trades, including a $2 billion gain from shorting subprime mortgages during the 2008 crisis and a $600 million profit on Argentine bonds. Since founding Olympus Peak, he has found success in distressed situations, profiting from the bankruptcies of Latam Airlines, FTX, and PG&E.

Olympus Peak’s first trade claims fund, launched in 2021, has delivered low double-digit net returns, with profitable outcomes on over 90% of its investments. Perry has advised Olympus Peak since its inception and was an anchor investor.

Beyond finance, Perry remains active in philanthropy, serving on the University of Pennsylvania’s board. He and his wife, designer Lisa Perry, own properties in New York, France, Palm Beach, and the Hamptons. An avid sports enthusiast, he has taken up stand-up paddle surfing, golf, and padel.

Retail investors who fueled the meme-stock craze are now becoming a resource for hedge funds and asset managers, thanks to a new partnership between Intercontinental Exchange Inc. (ICE)and Reddit Inc.

The agreement will allow ICE to develop data products using the vast troves of Reddit posts, comments, and videos. The goal is to analyze trends and sentiment in real time, offering institutional investors an edge in market strategy.

“If we can capture the sentiment of posts, along with the changes, that becomes a valuable piece of information,” said Chris Edmonds, ICE’s president of fixed income and data services. ICE, which owns the New York Stock Exchange, will initially roll out the service to hedge funds and asset managers, with plans to expand access over time.

Reddit, known as the epicenter of the meme-stock phenomenon, saw retail traders drive up shares of GameStop and AMC, leading to massive hedge fund losses on short positions. Since going public last year, the platform has grown to 101 million daily users generating over 22 billion posts and comments.

“The conversations that take place on Reddit on any given day or any given minute can offer a real-time look at the news and trends that are happening around the world,” said Jonathan Flesher, Reddit’s VP of Business Development.

With market sentiment playing an increasing role in trading strategies, institutional investors may soon rely on Reddit as a key data source.

Under President Javier Milei’s leadership, Argentina has emerged as one of 2024’s most compelling investment narratives, marked by dramatic economic reforms and improving market conditions. The country’s transformation is perhaps best illustrated by its remarkable inflation trajectory. The International Monetary Fund projects annual inflation to fall to 45% in 2025 from a staggering 211% in 2023 and has praised this “impressive progress.”

At the heart of this turnaround lies Milei’s aggressive fiscal restructuring, which has yielded the nation’s first budget surplus in 16 years. Through substantial public sector downsizing and a 30% reduction in government expenditure, the administration has demonstrated commitment to economic discipline. The implementation of the Large Investment Incentive Scheme (RIGI) further signals Argentina’s openness to foreign capital.

Savvy investors are capitalizing on this turnaround through multiple entry points. Dollar-denominated sovereign bonds, trading at significant discounts, offer potential upside as the country’s credit profile improves. The Merval stock index provides exposure to Argentina’s leading companies, particularly in the energy and financial sectors. For sophisticated investors, local corporate bonds offer attractive yields, though currency risk must be carefully managed.

The country’s investment landscape is particularly compelling in key sectors. Vaca Muerta, the world’s second-largest shale formation, presents opportunities through energy majors like YPF. Agricultural commodities offer another avenue, with major agricultural companies poised to benefit from improved export conditions and reduced government intervention.

However, investors should employ strategic risk management. Recommended approaches include: position sizing limits, currency hedging, and diversification across asset classes. While challenges remain, including foreign currency reserve deficits, Bank of America’s assessment that the stabilization plan is “exceeding expectations” reflects growing international confidence in Argentina’s economic trajectory. This economic renaissance, while still evolving, presents strategic opportunities for investors willing to participate in this emerging market transformation.

Hedge funds are increasingly investing in nuclear-power producers, anticipating a surge in electricity demand from the artificial-intelligence (AI) sector. A recent analysis of 697 funds with over $3 trillion in assets under management reveals this trend.

In the third quarter, money managers continued to add nuclear-sector stocks to their portfolios, even as they reduced positions in other power producers and infrastructure companies. This strategic move is reflects the recognition of nuclear energy’s growing role in supporting the energy-intensive AI infrastructure.

Tech industry leaders like Meta Platforms and Alphabet have previously suggested that new nuclear facilities could help meet this increasing demand. As a result, Texas power producer Vistra Corp., which operates 6.4 gigawatts of nuclear-energy generation capacity in the U.S., has joined Goldman Sachs’s Hedge Fund VIP list of popular long equity positions.

Similarly, Talen Energy Corp., another Texas-based independent power producer, entered the VIP list in the third quarter. Talen owns and operates the 2.7 GW Susquehanna Steam Electric Station in Pennsylvania. In March, Amazon Web Services struck a $650 million agreement with Talen to acquire a data center powered by Talen’s Pennsylvania nuclear facility. This partnership underscores the growing symbiosis between tech innovation and clean energy solutions.

While hedge funds maintained their exposure to AI-related themes, they reduced investments in the semiconductor industry for the first time since Q2 2022. The “Magnificent Seven” megacap tech stocks continue to drive significant returns, contributing to U.S. equity long/short funds generating impressive gains of 14% in 2024 so far.

The surge in hedge fund interest in nuclear power stems from multiple factors: anticipated electricity demand growth, particularly from AI; nuclear energy’s role in clean energy transition; attractive market opportunities in the uranium sector; technological advancements in reactor designs; government and industry support; and nuclear power’s potential to ensure long-term energy security. These factors collectively position nuclear energy as a promising investment in the evolving energy landscape.

Nissan Motor Co. shares jumped 21% last week after activist investor Effissimo Capital Management acquired a 2.5% stake in the struggling Japanese automaker. Suntera (Cayman) Ltd., a trustee of ECM Master Fund, was listed as the buyer. ECM Master Fund has previously been linked to Effissimo, a Singapore-based hedge fund known for investing in distressed companies.

This move comes at a critical time for Nissan, which recently announced plans to cut 9,000 jobs and reduce production capacity by 20% amid plummeting profits. The company also slashed its annual operating profit forecast by 70% last week.

Effissimo’s involvement has sparked speculation about potential structural reforms at Nissan. The hedge fund has a history of pushing for changes in Japanese companies, most notably in its takeover of Toshiba Corp. in 2021, which led to the resignation of Toshiba’s CEO.

The stake acquisition reflects a growing trend of shareholder activism in Japan, with both international and domestic investors increasingly demanding improved corporate governance and capital allocation practices. Other activist investors like Elliott Investment Management and Oasis Capital have also taken significant positions in Japanese firms recently.

Farrer Capital Management Pty has closed its fund to new investments after reaching its $500 million target, establishing itself as a rare specialist in agricultural commodity trading. The fund, led by former Merricks Capital Head of Commodities Adam Davis, aims to capitalize on opportunities driven by geopolitical tensions and climate change.

The closure highlights a notable gap in the commodity hedge fund landscape. Among Bridge Alternatives‘ top 15 commodity hedge funds, which manage a combined $19 billion, only one exclusively focuses on agriculture, underscoring Farrer’s unique position in the market.

The fund has built a global presence with team members across Australia, North America, and South America, with plans for continued international expansion. Its investment strategy combines derivatives trading and physical investments in global agricultural markets, with a particular focus on Australian opportunities.

Farrer Capital targets returns of over 15% and offers specialized high-conviction opportunities to investors. The successful fundraise comes at a time when commodity hedge funds are seeing renewed interest, following a period marked by the departure of several major players.

This milestone suggests a potential shift in investor sentiment towards specialized agricultural trading strategies, particularly as global factors like climate change and geopolitical tensions continue to influence agricultural markets.

Hedge funds are making significant moves into Chinese stocks, betting on a swift economic recovery fueled by Beijing‘s stimulus measures. This trend has caught the attention of major players in the industry, with US-based Mount Lucas Management taking bullish positions on China ETFs, while Singapore’s GAO Capital and South Korea’s Timefolio Asset Management focus on Chinese large-cap stocks.

Beijing’s comprehensive economic stimulus package is designed to reinvigorate China’s economy through a series of well-crafted measures. These include optimizing the reserve requirement ratio (RRR) for banks, adjusting interest rates, and bolstering the real estate sector. The initiative has sparked a remarkable surge in Chinese stock markets, with the CSI 300 index soaring over 24% in just one week following the announcements.

This surge in Chinese stocks has been remarkable, with mainland markets entering a bull market and posting their biggest gains since 2008. This rally has attracted notable investors, including billionaire David Tepper and BlackRock Inc., the world’s largest money manager. The optimism is driven by a series of favorable policies and stimulus measures implemented by the Chinese government.

Australian mining stocks are being utilized as proxies for Chinese investments, allowing hedge funds to gain indirect exposure to China’s economic recovery. Major Australian mining companies like BHP and Rio Tinto stand to benefit from increased demand for commodities such as iron ore and copper, which are essential for China’s growth. This perception has led to heightened interest in Australian mining stocks among global investors seeking to capitalize on China’s reopening without directly investing in its markets.

Despite the current enthusiasm, some investors remain cautious. The prolonged slump in Chinese equities, fueled by a housing market crisis and deflation, has previously impacted returns for major investment firms. However, many fund managers see this as a turning point, with David Aspell of Mount Lucas noting that stocks often rally before economic recovery is fully realized.

The impact of this trend extends beyond China, with some funds reallocating capital from other Asian markets to Chinese stocks. As the rally continues, it’s clear that Chinese assets are becoming a focal point for global investors, potentially reshaping investment strategies in the coming months.

In a significant move that merges the worlds of finance and media, hedge fund titan Paul Marshall has acquired the influential British publication, The Spectator, for £100 million ($131 million). This acquisition marks a notable expansion of Marshall’s media portfolio, which already includes investments in UnHerd and GB News.

Marshall, the chairman of Marshall Wace LLP, a global hedge fund managing $66.6 billion in assets, secured the deal through his Old Queen Street Media vehicle. The transaction, which values the 196-year-old magazine at a premium, underscores the growing trend of financial heavyweights entering the media landscape.

The acquisition of The Spectator, known for its significant influence in Conservative circles, aligns with Marshall’s right-leaning media interests. Old Queen Street Ventures has expressed plans to expand the magazine’s reach across “the Anglosphere and in North America,” signaling potential growth strategies.

This deal comes amidst a broader reshuffling in British media ownership. The Spectator was put up for sale alongside the Telegraph Media Group after a previous Abu Dhabi-backed acquisition attempt was blocked by the UK government. Marshall remains a contender in the ongoing bidding process for the Telegraph newspapers, with bids due later this month.

The hedge fund chief’s foray into media ownership reflects a growing intersection between finance and publishing, potentially reshaping the landscape of British political journalism.

The U.S. Securities and Exchange Commission (SEC) has decided to end its legal battle over new fee disclosure rules for hedge funds and private equity firms. Following a recent court ruling against the regulations, the SEC chose not to appeal to the Supreme Court by the Tuesday deadline.

The rules, introduced in August 2023, required private fund managers to provide more detailed quarterly reports on fees and expenses to investors. Additionally, the SEC aimed to prevent firms from offering favorable redemption terms to select investors without extending the same terms to all. The SEC argued these changes would increase transparency and benefit investors.

However, industry groups quickly opposed the new regulations, leading to a legal challenge. In June 2024, a panel from the Fifth U.S. Circuit Court of Appeals ruled that the SEC had exceeded its authority. The regulator opted not to seek a full court review, leaving the Supreme Court as its final option, which it ultimately declined to pursue.

The decision marks a victory for industry groups such as the Managed Funds Association and the American Investment Council, who argued that the SEC’s rules targeted sophisticated investors, not retail ones. SEC Chair Gary Gensler remains committed to addressing transparency concerns in private funds, signaling the issue may resurface through other avenues.