SEC Filings Shine Light On Leverage

Apr 13 2012 | 11:16am ET

Leverage is said to be down across the hedge fund industry, but it's still fairly prevalent at the world's biggest firms, according to new data submitted to the Securities and Exchange Commission.

The 50 largest hedge funds reporting to the SEC claimed net assets of $820.8 billion. But the SEC, adding in leverage, puts their "regulatory assets" at more like $1.3 trillion. Another measure also shows big growth that didn't come merely from performance or fundraising: The 50 largest funds registered with the SEC last year, when it was voluntary, have combined assets of $613 billion. This year, the figure is $1.35 trillion.

Those figures aren't exact. For one, the two lists include different firms and the SEC's methods double-count some assets. But the mathematical issues don't always fall on the side of overestimating: Nineteen of the 50 largest firms didn't report net assets, including the biggest, Bridgewater Associates, which reported more than $121 billion in regulatory assets.

Of the 31 that reported both, regulatory assets were more than double net assets.

According to the newest numbers, Citadel Investment Group and Millennium Management are something like nine-times levered, with the former's $12.6 billion in assets ballooning to $115.2 billion, and the latter's $13.5 billion to $119 billion.

Other big firms reported somewhat more modest levels of leverage. D.E. Shaw Group's and SAC Capital Management's regulated assets are about four times as high as their net assets. Renaissance Technologies' assets rise about two-and-a-half fold, while AQR Capital Management's assets balloon by $30 billion to $75.6 billion.


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