Appaloosa, Barnegat, CQS Post Big Gains

Oct 24 2012 | 12:55pm ET

It wasn't long ago that hedge funds regularly posted double (and even triple) digit returns on a regular basis, and just as regularly bested the broader markets.

Now, when a handful do so, it's cause for a story on the front page of The Wall Street Journal's money and investing section.

The Journal pointed to five managers who have lapped their peers (and the Standard & Poor's 500 Index) this year. Barnegat Fund Management's flagship is up 39%. Pine River Capital Management and Tilden Park Capital Management have soared 30% this year, with CQS adding 27.3% and Appaloosa Management about 25%. The figures for Appaloosa, Barnegat and Pine River are through Friday; CQS and Tilden Park's numbers are through September.

Hoboken, N.J.-based Barnegat tops the Journal's list of all-stars with a liberal use of leverage to amplify returns in its $617 million relative-value strategy—one of 11 reasons not to invest in the fund that founder Bob Treue sends to potential investors. Pine River and Tilden Park profited on mortgage investments, the former of the subprime variety and the latter of the distressed; Tilden Park has also made money on credit default swaps.

CQS' gain was of the across-the-board variety, the Journal reports. Appaloosa's David Tepper did it the old-fashioned way: stock-picking. The $15 billion New Jersey firm's returns have been buoyed by its bets on airline, technology and European stocks.

The average hedge fund is up less than 5% this year.


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