Baby Sister Hedge Funds Showing Better Results than Big Brother

August 4, 2012 James Heinsman Company Spotlight

This year has been another slow year for the hedge fund industry, with the average fund growing by an anemic 2.10 percent as of June. Yet there is a glimmer of exciting results within the $2 trillion industry among some of the smaller hedge funds which have been sprouting from larger predecessors.

Take as one example Marcato Capital Management based in San Francisco. Founded by Mick McGuire, Marcato posted double digit gains within the short time since McGuire left William Ackman’s $10 billon Pershing Capital Square Management.

Ranked among this year’s best performing hedge funds, Marcato gained 17.6 percent from January until the end of July. Studies have consistently shown that smaller funds often perform better than the larger and older funds, not only because they are more nimble, but also because their managers are younger and more ambitious. McQuire’s fund has assets under management totaling about $675 million, and has not only outperformed Pershing, but has also ran circles around David Einhorn’s Greenlight Capital, with assets under management totaling about $8 billion.
 

David Einhorn, Greenlight Capital, Marcato Capital Management, Mick McQuire, Pershing Capital Square Management,

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