The market sell-off and overall volatility since the summer has been especially rough on the big-name activist hedge fund firms, which essentially run long-only funds.
New York–based Pershing Square Capital Management, for example, plunged 12.5 percent in September alone and is down 12.6 percent for the year through the first nine months.
Several funds that engage in activities other than activism are also down sharply for the year, including New York–based Greenlight Capital, down 16.9 percent.
But one high-profile activist is only slightly in negative territory after suffering a rough third quarter, while another one is still solidly positive.
Jeffrey Ubben’s San Francisco–based ValueAct Capital lost 8 percent in the third quarter and is now down 1 percent for the year to date, according to an investor in the fund. The concentrated fund was clearly hurt by the rout in the shares of its largest and one of its most high-profile holdings, Valeant Pharmaceuticals International, which fell 20 percent in the third quarter alone after Hillary Clinton tweeted threats about possibly controlling drug costs if she were to become president.
ValueAct also lost large sums from two energy giants. Halliburton, its third-largest holding, lost 18 percent for the quarter, while Baker Hughes fell nearly 16 percent. In addition, media giant Twenty-First Century Fox declined by about 17 percent.
On the other hand, two of ValueAct’s other largest holdings were either flat or mildly profitable. They include Microsoft, which was roughly the same size position as Valeant at the end of the second quarter, and Adobe Systems.
Meanwhile, Christopher Hohn’s The Children’s Investment Fund Management (TCI) lost 5.8 percent in September alone and more than twice that amount for all of the third quarter. However, it is still up 8.9 percent through September, according to an investor.
Hohn is still profitable thanks to a very strong first half. TCI had gained 21 percent through June, led by its huge position in Time Warner Cable, which agreed to be acquired by Charter Communications; Aurizon, the Australian rail freight company; and Moody’s Corp., the New York–based credit ratings company.
TCI, for its part, runs a very concentrated book. At the beginning of the year, it managed $8.8 billion, spread over ten stocks.
It was especially hurt by its sizable stake in Porsche, according to an investor in the fund. A spokesperson for the firm declined to comment.
Since reports were made public last month that Volkswagen intentionally circumvented emissions rules in the U.S., shares of Porsche have plummeted by about 35 percent.
At the 2013 Delivering Alpha conference, Hohn singled out Porsche as his “Best New Idea,” asserting that investing in it was a good way to bet on Volkswagen. Last month Porsche raised its stake in VW to a majority position.
Otherwise, several other significant holdings lost money but not large amounts. Shares of Aurizon were down only 2 percent in the third quarter.
Time Warner Cable fell more than 3 percent last month but was up slightly for the quarter. The cable giant accounted for $2.9 billion of TCI’s $4.3 billion U.S. stock portfolio at the end of the second quarter. Moody’s dropped nearly 9 percent last quarter. Comcast, which accounted for nearly $809 million of the portfolio at the end of the second quarter, was down about 7 percent in the September three-month period.
