Activist Returns Widely Dispersed

Sep 30 2013 | 12:54pm ET

Shareholder activists rarely see eye-to-eye—take the disagreements between William Ackman, Carl Icahn and Daniel Loeb this year—a fact that is showing up in their returns.

The performance gap between among some of the biggest activists this year is more than 23 percentage points, Pensions & Investments reports. The best performer is Trian Fund Management, up 24.3% through the end of August. The worst is Pershing Square Capital Management's International Fund, led by Ackman, which is up just 1.1% through Sept. 13.

The gap may seem large, but it's par for the strategy: There was a 34 point gap last year, a 24 point gap in 2011 and a 33 point gap in 2010.

"There always is a lot of dispersion in the returns of activist hedge funds because of their idiosyncratic investment styles," Mesirow Advanced Strategies's Terra Fuller told P&I. Mesirow puts the average annual gap since 2005 at 25 percentage points per year.

P&I compared eight of the largest activist hedge funds used by institutions.

Activists frequently take opposing sides on a company, such as Herbalife. Pershing Square has a $1 billion short against it, while Icahn and Loeb's Third Point have made money on the long side of the nutritional supplements company.


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