Forget about Black Friday. November is looking as if it could be the month that puts many hedge funds solidly in the black for the year, at least based on performance numbers for two notable portfolios.
David Einhorn’s Greenlight Capital reported a 4.7 percent gain in the month of November, putting the firm’s flagship fund up about 19.1 percent for the year, according to an investor with knowledge of the matter. Mr. Einhorn’s firm, which has about $10 billion in assets under management, started the year slow, but has been posting strong gains in the second half of this year.
Another firm that reported early, Daniel Loeb’s Third Point, which has $14 billion in assets under management, also had a strong November. Its flagship fund, Third Point Partners, was up 2.7 percent for the month and is now up 23.2 percent for the year. The more leveraged Third Point Ultra fund is now up 33.4 percent for the year, after rising 3.6 percent in November.
Neither fund manager provided investors with any commentary to explain the reason for the strong November performance. That commentary is likely to come from the fund managers in the coming days.
Mr. Loeb, one of the hedge fund industry’s better-known activist investors, has made headlines in recent weeks by calling for change at the auction house Sotheby’s, where he is pressing for management changes. His Third Point has reported having a share stake of more than 9 percent in Sotheby’s. And just last week, Third Point disclosed taking a stake in Japan’s SoftBank that is valued at about $1 billion. Apple, one of Greenlight’s largest holdings, has risen sharply this month.
Before November, many hedge funds lagged the Standard & Poor’s 500 by a wide margin, with the average fund up about 7 percent since the start of the year. In November, the S. & P. 500 rose 2.8 percent. For the year, the index is up 26.62 percent.
Critics have pointed to the hedge funds’ lackluster performance in arguing that many managers are not doing well enough to justify the industry’s high fee structure. But industry analysts note the average performance figure includes funds that do not mainly trade stocks and that managers are supposed to balance out a fund’s performance by going both long and short on stocks.
