Hedge Fund Performance Update for May and YTD

Hedge funds gained over 5% in May and are now up over 9% for 2009, according to various hedge fund indices. This means it is the industry's best monthly return in a long while. This of course comes after their general under-performance in March and April.

Such lagging led us to pen a piece entitled, 'under-performance angst' in which we examined how fund managers react to the notion of panic to the upside as they are left behind. But, it seems as if May was an equalizer month for many funds; especially those who were playing the commodity trade. Don't forget that we're tracking almost all of the funds listed below in our hedge fund portfolio tracking series.

May 2009 & year-to-date performance numbers:

Hedge Funds in general gained 5.68% in May 2009.

John Paulson's Paulson & Co is up 8.75% year-to-date through the end of May in their flagship fund. We recently covered Paulson's portfolio and large investment in gold.

John Burbank's Passport Capital had a massive month, up 24% in May and are now up 33% for the year. This is their largest monthly return in over 2 years as their large stakes in commodities and fertilizer companies helped them. Specifically, their stakes in Mosaic (MOS) and Jordan Phosphate Mines definitely helped as those shares were up 35% and 43% respectively. This of course comes after their first ever loss in 2008 (-51%) after more than tripling the year prior in 2007. They are now seeing 28% annualized returns since inception, which are still some very solid numbers. We had previously covered Passport's portfolio and are getting ready to update it in our portfolio tracking series. Here's its monthly breakdown:





Ken Griffin's Citadel Investment Group also had an amazing comeback as its flagship Wellington and Kensington funds were up 6% for May and are now up 21% for 2009. This comes after its horrible 2008 performance in which it lost 46% of its assets and landed a place on the top 10 asset losers of 2008 list. In other recent developments, Citadel hired numerous ex-Merrill Lynch investment bankers to expand the firm's new investment banking arm. Looks like it's searching for more sources of income since its hedge funds won't be garnering any performance fees for a while.

Carl Icahn's Icahn Partners was up 7.3% for May and is now up 16% in 2009. This comes after a horrific 2008 in which he was down 38%. In the current market landscape, Icahn has seen opportunities in distressed corporate debt and is also using such a position to seize control of companies since he often employs an activist approach. We haven't covered Icahn much recently, but we have noted his large position in Biogen Idec (BIIB), among others.

Steven Cohen's SAC Capital is faring well, up 13.93% through May for 2009.

Jim Simons' Renaissance Technologies sees its RIEF fund down over 16% for 2009 as its quant strategies have struggled. Curiously enough, its closed and wildly successful fund Medallion continues to crank out great returns while its outside investor funds (including RIEF) continue to pump out sub-par performance. The root of Renaissance's poor performance stems from its preference of low volatility. In the recent market rally, 'crap' stocks rallied hard and drove volatility higher, thus hurting Renaissance's RIEF fund. Here is its May investor letter and performance breakdown courtesy of Dealbreaker.

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And the breakdown:

(click to enlarge)

Dan Loeb's Third Point LLC is faring decently this year with his Offshore fund up 7.4% for May and now up 5.4% year to date. Third Point's Partners fund was up 6.4% in May and up 4.3% for the year. Below is its monthly investor letter report for May 2009:

Dan Loeb's Third Point May Letter -

Additionally, Third Point has recently seen three top executives leave the firm: Devin Dallaire, Bruce Wilson, and Tom Kratky, the chief risk officer, the chief operating officer, and the head of investor relations respectively. The change is interesting, seeing how investors will always be cautious when you see such widespread management changes at publicly traded companies. So, would that not apply to hedge fund land as well? Loeb doesn't think so, as he has alleviated these concerns with one of his eloquent letters. Additionally, check out how Third Point has defensively positioned its portfolio to weather the storm, as detailed in a previous letter here:

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Jeffrey Gendell's Tontine Associates has seen an amazing turnaround, as his Tontine-25 fund was up 17.5% for May and is now up 72.3% year to date. Tontine Partners fund was up 15.2% for May and is up 49.8% year to date. This rollercoaster ride comes after Tontine previously closed 2 of its funds after posting massive losses in 2008. Now, Tontine has raised $11 million for its new Total Return fund after launching it in February. Courtesy of Dealbreaker, here is a nice graphic breaking down the month-to-month performance of its 2 remaining main funds:

(click to enlarge)

Larry Robbins' Glenview Capital is faring well this year, up 9.44% for May and up 37.63% for 2009. Glenview had average monthly gross exposure of 197.55%, with 132.17% long and -65.37% short, leaving it net 66.8% long. Glenview was previously listed on our top 10 asset losers of 2008 list, losing 50% of its AUM last year. Here's is its monthly breakdown:

Glenview Capital May Letter -

Bill Ackman's Pershing Square Capital was -0.2% for May and is now up 9.8% year to date. In its investor report, Pershing detailed that it has a notional exposure of $1 billion to long positions in credit default swaps. It had 7 long equity positions, 2 short equity positions and had an overall long exposure of 68% and short exposure of -10%, with the bulk of each weighting falling in large cap stocks. Ackman has been quite busy lately, as we've covered his thoughts on his positions in Target and General Growth. Additionally, we recently posted up his (GGWPQ.PK) presentation from the Ira Sohn Conference. And, just yesterday, we learned that Ackman has garnered a seat on General Growth's board as they go through their bankruptcy proceedings.

Louis Bacon's Moore Capital Management is up 6.3% thus far in 2009.

David Einhorn's Greenlight Capital was up 6.4% for May and is up 19% for 2009. You can see where its strong performance is coming from by checking out their portfolio, which we recently examined.

Definitely a solid month for hedge funds after being caught offguard in March and April. We'll continue to track their performances and you can check out their past April numbers here as well. Make sure to check out the portfolios of many of the funds listed above in our hedge fund tracking series.