Senvest Hedge Funds Drop 59%, Manager Sees Glass Half Full

Dec 22 2008 | 6:26am ET

While losing 59% in one year may cause some hedge funds managers to head for the hills, Richard Mashaal isn’t deterred. Mashaal’s small-to-micro cap long/short funds, Senvest Israel Partners and Senvest Partners, are down 56.48% and 59.4%, respectively, through November.

“We’re having a very bad year for a whole host of reasons,” said Mashaal, whose firm managed $277 million in total assets as of the end of November. “There were fairly motivated sellers and hedge fund liquidations and I think we were in some of these names that were affected by those events.”

The funds’ net long positions also hurt their performances this year.

“We were in the range of 30% to 60% net long for most of the year and took that to 100% net long in October, so that hurt us as markets continued to fall, and we thought it was bottoming at that point,” said Mashaal.

He added that the funds have had minimal redemptions because of the firm’s longstanding relationships with its investors. In fact, roughly half of the funds’ assets belong to his family.

Mashaal remains optimistic, believing that his funds will “come roaring back” if their past performances repeat themselves. According to public databases, Senvest Partners dropped 27.78% in 1998 only to come back the following year up 151.19%. The same fund lost 37.2% in 2002 and came back again in a big way in 2003, gaining 168.61%.

“We’ve had two years of over 100% net returns. So who knows if another 100% year is just around the corner?” said Mashaal.

The Senvest funds are affiliated with Senvest Capital, which is a publicly traded company listed on The Toronto Stock Exchange.

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