Hedge Funds Making a Comeback

June 11, 2018 James Heinsman Company Spotlight

Photo courtesy of Alpha Stock Images,

As Mark Twain once so famously quipped after seeing his own obituary in a newspaper, “Reports of my demise are greatly exaggerated,” so too the reports of the end of hedge funds appear to be exaggerated. Quite the contrary, by the end of last year, and continuing into this year, hedge funds are on a definite rebound.

The industry is experiencing good news on two fronts: cash flowing into the numerous funds, as well as noticeably improved returns for investors. According to hedge fund researcher HFR, as of October 2017 the average hedge fund advanced 5.4% while $39 billion of new money entered the arena. The increase is the best its been since 2010, while in 2016 $112 billion exited the hedge fund sector. That turn around is giving many investors and managers something to smile about.

One example of a hedge fund riding this wave of good news is Brahman Capital Corp, a New York based firm that went mostly unnoticed for over thirty years. Two years ago, Brahman Capital reached its high point of over $5 billion in assets under management. Betting on a popular stock at the time, Valeant Pharmaceuticals, the fund traveled the storm down along with Valeant, which crashed from a high of $257 per share to $14 a share. This set-back forced Brahman to report losses to their clients, and some withdrew their money.

Brahman picked itself up, unloaded its shares of Valeant and, with its remaining $38 billion AUM, pulled itself up to bigger and better rewards. During 2017, the fund experienced a gain of 17% and expects the good news to continue while it rides the wave of better times along with the industry as a whole.

Brahman Capital, Brahman Capital Corp,

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