Appaloosa, Owl Creek, Tudor Among '13 Winners

Jan 3 2014 | 3:11pm ET

History will show that 2013 was an extremely disappointing year for hedge funds, with the average manager struggling to achieve even one-third the return of soaring stock markets. But a number of prominent managers will remember last year very differently.

Appaloosa Management returned 42% and Owl Creek Asset Management 48%, to name just two of the hedge funds to top the Standard & Poor's 500 Index's nearly 30% rise last year. Tudor Investment Corp. didn't do as well overall, but it earned more than 100% shorting gold in 2013.

The $14 billion hedge fund's bearish play on the precious metal was championed by senior trader Chris Tuohy, who turned less than $10 million in gold put options into more than $100 million, The Wall Street Journal reports. Tudor made further gains on gold from founder Paul Tudor Jones' own smaller short against the metal.

Tuohy has since exited his gold short, missing out on its further fall towards the end of the year. Gold lost 28% in 2013, its first annual loss in more than a decade.

Bearish bets weren't the only winners in 2013: Appaloosa's long options on stocks paid off handsomely, and Paulson & Co.'s $2.7 billion Recovery Fund rose 55% through November on bullish stock bets. Jericho Capital Partners earned 33% through November after boosting its exposure to stocks.

Owl Creek's impressive return stemmed from its bet that the new Japanese government, led by Prime Minister Shinzo Abe, would employ aggressive new monetary policies to boost its flagging economy.

Merk Investments' 5.8% return may seem downright pedestrian compared not just to last year's big winners, but also to the average hedge fund. But the Palo Alto, Calif.-based first made its money in currencies, which battered most players in 2013—the average currency fund fell nearly 5% last year.

Merk's founder and namesake, Axel Merk, bet heavily on the euro, which most investors expected to fall. Instead, it rose as fears about a eurozone collapse faded.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.