Roy Niederhoffer Closes Out Profitable Year

Jan 23 2008 | 1:00am ET

While Victor Niederhoffer suffered another implosion last year, his younger brother Roy continued to rack up profits in the face of a challenging environment for hedge funds.

For the year, Niederhoffer reported an estimated 29.5% gain for his $221 million offshore Diversified program and a 19.8% gain for the $614 million offshore Negative Correlation program. During volatile periods in 2007, Niederhoffer said his funds “fulfilled their dual mission of significant stand-alone return and substantial protective impact for portfolios in which they are included,” in his latest missive to investors.

He said the Negative Fund’s November gains of 12.5% was the highest of 174 large funds on the Barclay’s Flash Report that month and it also outperformed during two other challenging periods of the year–February (up 7.31%) and the first half of August. “In fact… the Negative Correlation Fund achieved a –2.04% beta to the S&P 500 for the year, as well as a -0.93 correlation to the S&P 500 for the year. This makes it possible substitute for or adjunct to a put buying strategy, and allows its users to reduce equity downside risk substantially,” he said.

Going forward, Niederhoffer is upbeat on the high volatility and uncertainty across most sectors and anticipates further forays in the high-frequency trading space.

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