Wednesday, February 1

US Tech-Focused Hedge Funds Brace For Heavy Losses Amid Market Slide


US Tech-Focused Hedge Funds Brace For Heavy Losses Amid Market Slide

Even earlier than this week’s decline, funds that guess on expertise, well being care shares had been feeling the ache.

New York:

U.S. hedge funds that focus broadly on expertise investments are bracing for heavy losses this yr as gloomier financial information sparked a contemporary selloff this week, shrinking hopes of clawing again any vital floor in coming months.

For fund managers, together with these gathered at one of many trade’s greatest conferences in New York, any optimism from final week’s market rally was sapped by a contemporary sucker punch on Tuesday because the S&P 500 slid 4.3%. Many funds had been already sitting on declines of 30% or extra.

Speakers at a panel on the state of the trade on the SALT New York 2022 convention urged buyers to stay with their bets, arguing the downturn may change into a cash making alternative.

But off stage, the temper was darker.

“It will take a whole lot of work to get out of this gap,” mentioned David Moon, managing director at which tracks hedge fund managers’ investments and returns.

Even earlier than this week’s decline, funds that guess on expertise and well being care shares had been feeling the ache. Whale Rock Capital Management LLC’s principal fund tumbled 38% by way of August whereas HMI Capital Management dropped 39% within the first eight months of the yr. Casdin Capital was off 50% and SoMa Partners was off 31%.

Other outstanding fund managers, together with some who obtained their begin with the not too long ago deceased Julian Robertson, credited with serving to pioneer being profitable when shares fall, are additionally within the pink. Coatue Management misplaced 17% within the first eight months of the yr whereas Maverick Capital is off 27% by way of August.

Representatives for the funds declined to remark.

“I’ve been by way of 9 bear markets and so they completely suck,” mentioned Anthony Scaramucci, managing accomplice of funding agency SkyBridge Capital and founding father of the three-day SALT convention.

The broader S&P 500 Index fell 17% by way of August whereas the typical hedge fund dropped 4% by way of August in line with Hedge Fund Research (HFR). The HFR expertise and healthcare index is down roughly 15%.

Goldman Sachs reported that hedge funds stocked up on tech shares once more final week, making it essentially the most strong shopping for spree within the sector in seven months.

For many of those funds this yr’s losses come after a string of sturdy returns fueled by a decade lengthy bull market, buyers and fund managers mentioned.

And not all hedge fund are faring poorly this yr.

Citadel reported that its Wellington fund returned 3.74% in August, bringing its yr thus far returns to 25.75%. DE Shaw, in its Composite fund, reported a 20% acquire to buyers. Representatives for the companies declined to remark.

At the SALT convention, poor returns had been prime of thoughts, as the main focus of the convention additionally shifted from hedge funds to crypto investments. Many of the outstanding buyers who appeared through the years, together with Steven A. Cohen, Daniel Loeb, and Ray Dalio had been absent. Private concert events and pool-side events that featured when the convention was held on the Bellagio in Las Vegas had been changed by buffet lunches with pasta, tacos and salad on the cavernous Jacob Okay. Javits Convention Center in Manhattan.

Two hedge fund executives who skipped SALT this yr advised Reuters they had been nervous in regards to the optics of paying hundreds of {dollars} for a ticket at a time buyers had been withdrawing capital from their companies.

Greg Jensen, co-chief funding officer at Bridgewater Associates, one of many world’s greatest hedge funds based by Ray Dalio, echoed the extra somber tone. Financial markets had not absolutely priced the prospect of a recession, he warned, simply hours earlier than the market tumbled on Tuesday and slipped extra on Wednesday.

(This story has not been edited by NDTV workers and is auto-generated from a syndicated feed.)


2022-09-15 11:02:05

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