WHAT ARE WE LOOKING FOR?
Canadian hedge fund managers who have joined the minus 40-per-cent club this year.
The market meltdown has been brutal for many, especially those in commodity and smaller-company stocks. But these managers also have tools like selling short to protect their downside.
We checked year-to-date returns to Nov. 30 for the alternative investments category in Globefund, and their past quartile ranking. Most hedge funds are valued monthly. We excluded the U.S.-dollar and other versions, plus the Horizons BetaPro's bull and bear exchange-traded funds.
WHAT DID WE TURN UP?
Hedge funds winding down, gearing up to start over, suspending redemptions, or yanking their red return off the Globefund website.
It's hindsight, but their investors could have done better this year in less exotic fare like an index fund tracking the S&P/TSX composite index. This benchmark was off 33 per cent for the first 11 months, and 38 per cent as of yesterday.
Arrow Elmwood Fund, run by Rick Serafini, was a casualty of this bear market. The small fund, which was invested in U.S. smaller-cap technology and health care stocks, has closed with cash given back to investors. It was removed from Globefund this week.
Epic Limited Partnership, Epic Trust-A and Arrow Epic Capital are still in the process of winding down. The cash is being returned in tranches with the goal of giving back all the monies to investors by the end of the first quarter in 2009.
But David Fawcett, founder of Epic Capital Management Inc., expects to start another fund using a similar Canadian long-short hedge fund strategy early in the new year.
Investors in the original funds who invest with Epic again will not pay performance fees until the new one beats the old high-water mark, he stressed. "The knee-jerk reaction when people see a fund wind down and new fund open is that we want to reset the performance fee," he said.
On Nov. 10, Ravi Sood, who runs Lawrence Partners Fund, announced the suspension of redemptions for 60 days to be able to present alternative scenarios to its investors. The outcome is not clear yet. Both the Lawrence and Epic funds own some private and illiquid public securities, which cannot be sold easily.
Trapeze Value Trust, which posted a 38-per-cent gain in 2006 and a 16-per-cent loss in 2007, stopped filing returns to Globefund last Aug. 21 when it turned in a year-to-date loss of 35.4 per cent.
Randall Abramson, a manager at Trapeze Asset Management Inc., acknowledged his fund, which is owned in managed accounts at his firm, would fall into the minus 40-per-cent club now. "It's down about 75 per cent" because of battered small-cap stocks, he said.
|Minus 40 Club Hedge Funds To Date Nov 30 2008|
|(As of Nov. '08)||Latest||(Nov. 30. '08)||Quartile rankings|
|Fund name Assets ($-mil)||MER||YTD % return||2007||2006||2005||2004||2003||2002||2001||2000|
|DeltaOne Energy Fund LP||-99.0%||4||4||1||3||2|
|Dynamic Power Emerging Markets||24.0||7.6||-72.4%||1||1|
|Front Street Mining Opportunities F||22.3||-69.9%||1||1|
|Dynamic Power Hedge Fund-F||140.8||10.7||-69.3%||1||1||1||1||1|
|Salida Multi-Strategy Hedge||64.0||-67.6%||1||1||1|
|DeltaOne Strategic Energy||-66.7%||3||4||1||4|
|Arrow U.S. Equity Income||26.5||-61.0%|
|Horizons Northern Rivers Fund LP||-60.4%||4||1||1||3|
|Epic Limited Partnership||47.9||-60.1%||2||1||1||1||1||1||1|
|Northern Rivers Innovation Fund LP||39.0||-59.7%||3||1||1||2||1||1|
|Jemekk Long/Short L.P.||30.2||-57.0%||1||1||1|
|Webb Canadian Performance Fund||-55.1%||1|
|AlphaNorth Partners Fund Inc.||-53.6%|
|Sprott Small Cap Hedge||24.0||6.5||-49.6%|
|Northern Rivers Global Energy LP||3.7||-48.8%||1||2|
|Arrow Elmwood Fund||4.9||-48.2%||1||4|
|Arrow Epic Capital||34.7||-46.6%||1||1||1||2||1||1|
|Arrow WF Asia||16.5||-46.5%||1||1||2||2||1||3|
|Northern Rivers Cons Growth LP||8.9||-45.5%||2||1|
|SciVest Oil Sands Index PLUS-A||0.1||-43.5%||1|
|Arrow Enso Global||26.0||-40.5%||2||2||2||2||3|
|S&P 500 composite||-39.0%|
|MSCI World ($ Cdn)||-27.7%|
|S&P/TSX composite index||-33.0%|
© 2007 The Globe and Mail. All rights reserved.
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