Henderson Hedge Fund Falls 42%

Jan 10 2012 | 11:29am ET

Henderson Global Investors' main stock hedge fund plummeted more than 40% after fund manager Stephen Peak's highly-levered bets not only failed to pay off, but lost ground.

Henderson's European Absolute Return Fund lost 42% last year, Reuters reports. Peak's taste for oil and gas stocks, particularly mid-cap exploration companies, cost him dearly, as those names were whipsawed during a volatile 2011. The US$115 million firm averaged a gross position of 270% last year.

"Stephen was pretty comfortable and confident with the portfolio, but obviously was proved to be very wrong," Henderson global hedge fund head Paul Graham told Reuters.

Despite the huge losses, Peak hasn't given up on his bets, or on leverage.

"He's scaled some of the positions down, but he still thinks fundamentally these stocks are massively undervalued," Graham said. "The problem has been the macro environment."

"In a lot of ways it is similar to 2008," he added. "Stephen retained a high level of conviction post the crisis, and the fund rebounded very, very strongly."

Indeed: After loosing 39% in 2008, Peak's fund rose 110% in 2009 and 43% last year.


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