Most hedge funds with roots in Steven Cohen’s former hedge fund firm, SAC Capital Advisors, had pretty strong third quarters.
Even so, just six of ten of these hedge funds that we track — which we call the SAC Pack — were positive for the year through the end of September. And only three of the funds performed more or less in line with the average hedge fund or better. Data tracker HFR’s weighted aggregate hedge fund index gained 4.2 percent through September.
Interestingly, several of these fund managers also have some sort of tie to Julian Robertson Jr.’s Tiger Management, the original elite network of hedge fund managers. Interesting pedigrees, huh?
The best-performing SAC descendant that also has a fair amount of assets under management is Old Greenwich, Connecticut–based Tide Point Capital Management, headed by Christopher Winham. He was a senior research analyst at SAC Capital Advisors from 2002 to 2005.
The firm, which managed a little more than $1 billion at the end of 2015, was seeded by Tiger Cub Chris Shumway.
The firm’s hedge fund returned about 11 percent through the first three quarters of the year after gaining more than 4 percent in September. Tide Point emphasizes industrials, materials, and consumer discretionary and energy stocks.
At the end of the second quarter, its largest individual U.S. long holdings were specialty chemical maker Albemarle Corp., natural gas provider Targa Resources Corp., industrial gas maker Air Products and Chemicals, and packaging company Sealed Air Corp.
In the first nine months of the year, Albemarle gained 44 percent, Targa surged more than 81 percent, Air Products rose about 16 percent, and Sealed Air returned nearly 3 percent.
The next-best performer was Redwood City, California–based Dorsal Capital Management. The firm, which manages more than $2 billion, returned about 2.5 percent in the third quarter and 4.25 percent through the end of September.
It was founded by former SAC technology experts Ryan Frick and Oliver Evans. It emphasizes long-short equity investing, concentrating on technology, media, and consumer companies.
At the end of June, Dorsal’s largest positions were in telecommunications giant AT&T, online retailer Amazon.com, and wireless infrastructure company American Tower Corp. American Tower, Dorsal’s largest position at the end of the second quarter, added more than 16 percent in the first half. AT&T, its fourth-largest position at the end of the first quarter, rose 25 percent. Amazon.com gained about 19 percent in the second quarter.
The top performer among this group is a very small fund.
Summit, New Jersey–based Blue Anchor Capital Partners, which manages only about $13 million, returned about 2.6 percent in the third quarter and is now up 16.07 percent through September. It is a long-biased value investor that prefers these days to use cash rather than shorting to hedge its long bets.
Blue Anchor was founded by Vishal Ghiya, who worked for SAC’s Sigma Capital Management unit until 2014. He is also a Tiger Grandcub because he once worked for Tiger Cub Millgate Capital.
The worst performer in the third quarter was Kingdom Ridge Capital, co-founded in 2007 by former SAC Capital employees Christopher Zepf and Brian Thonn and based in White Plains, New York. The tech-oriented fund, which began the year managing $154 million, fell more than 12 percent in the third quarter, finishing the period down 3.23 percent after surging about 8.9 percent in the first half of the year.
The worst performer for the first nine months of the year was New York–based Folger Hill Asset Management. It fell 8.4 percent through September. But after a strong October, the fund is now down just under 6 percent for the year. The firm manages about $750 million.
It had raised about $1 billion when it was founded in early 2015 by Solomon Kumin, the former chief operating officer of SAC, and Todd Rapp, the former chief risk officer at Boston-based Highfields Capital Management, with backing from Leucadia National Corp. Kumin had joined SAC in January 2005 after spending time at Sanford C. Bernstein & Co. and Lazard Asset Management.
On Monday, Folger Hill announced that Schonfeld Strategic Advisors would invest $500 million to help launch Folger Hill Asia, an Asia-focused extension of Folger Hill’s existing long-short equity business. Under the deal, Schonfeld will provide investment and operating capital alongside Folger Hill and Leucadia to help launch the operation and hire people. Folger Hill Asia will be run by Angus Wai and currently has 11 employees, including seven investment professionals.
Jason Karp’s Tourbillon Capital Partners posted a 7 percent loss in its long-short fund, Tourbillon Global Equities. However, it was down more than 16 percent in the first quarter, after posting three straight years of strong gains. It was flat in October.
The firm’s long-only fund, Tourbillon Global Long Alpha Fund, returned 9.7 percent for the year through the end of September. However, this gain was cut to 6 percent by the end of October.
Here is the performance of ten hedge fund firms with roots at SAC Capital for the first three quarters of 2016:
Blue Anchor Capital Partners, up 16.07 percent
Tide Point Capital Management, up 11 percent
Dorsal Capital Management, up 4.25 percent
Hutchin Hill Capital, up 1.8 percent
Suvretta Capital Management, up 1.9 percent
Samlyn Capital, up 0.98 percent
Electron Global Fund, down 1.16 percent
Kingdom Ridge Capital, down 3.23 percent
Tourbillon Global Master Fund, down 7 percent
Folger Hill Asset Management, down 8.37 percent
Source: Investors, individual firms.
