Second Quarter Pain For Top Hedge Funds

Aug 9 2012 | 1:45pm ET

The second quarter wasn’t kind to some of the most prominent hedge funds in the U.S.

Elliott Management, Baupost Group and York Capital all disappointed during the period. Elliott lamented a “frustrating quarter” which saw its flagship hedge fund fall 0.5%, and Baupost marveled at the “strange world we inhabit.”

That world is “one where economies remain extremely depressed yet almost no companies go bankrupt, while low interest rates encourage holders of capital to speculate,” Baupost wrote. “One where global turmoil mounts while the world passively watches.”

“It would be absurdly funny if it weren’t so incredibly tragic,” it concluded. Baupost’s returns aren’t tragic, simply “nothing to write home about,” with its year-to-date return cut to 1.39%.

Elliott’s first-half return shrank to 4.6%. “Intense price action reportedly forced some firms to unwind trades, further exacerbating underlying price movements,” the firm wrote.

York Capital Management is also lagging the broader markets, with its flagship up between 3.11% and 3.62% on the year. Its event-driven funds are doing much worse, down between 4.47% and 6.46%.

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