| Barry Rosenstein, Jana Partners (Bloomberg) |
Hedge funds are reporting mixed results as October performance figures start to trickle in. However, some of the best-known firms have outperformed the widely followed Standard & Poor’s 500 stock index, which suffered a 1.9 percent loss last month.
So far, we have data for three hedge fund firms. One, Jana Partners, posted a slim 0.2 percent gain in its flagship fund of the same name in October. That fund has been profitable for four straight months now, after Jana revamped its portfolio in the second quarter, and has posted gains in five of the past six months. The activist hedge fund, headed by Barry Rosenstein, is now down just 0.9 percent for the year to date. Jana Nirvana, a more aggressive fund, gained 0.4 percent last month, trimming its loss for the year to 1.2 percent.
Meanwhile, Daniel Loeb’s Third Point Offshore Fund, a multistrategy fund that sometimes engages in high-profile activist campaigns, suffered a 0.7 percent loss in October. This trimmed its gain for the year to 6.4 percent. The fund is managed by Loeb’s hedge fund firm, Third Point.
We earlier reported that David Einhorn’s Greenlight Capital, a long-short equity, value-oriented hedge fund managed by the firm of the same name, posted a strong 1.2 percent gain last month and is now up 5.7 percent for the year. The fund often engages in long and short activist campaigns.
Jana can credit its second-quarter makeover with its recent success. On Monday, the last day of the month, Jana enjoyed a huge boost when one of its activist targets, TeamHealth, agreed to be acquired by the Blackstone Group for $6.1 billion, sending its shares surging by more than 16 percent in one day.
Last week Jana disclosed it owned 8.1 percent of HD Supply Holdings, its newest activist target. That stock, however, has been flat since the hedge fund made its disclosure in a regulatory filing.
Meanwhile, Jana posted strong gains last month from two of its three largest long holdings. ConAgra Foods, the food conglomerate that was Jana’s largest disclosed long at the end of the second quarter, rose 2.7 percent for the month. Longtime holding Walgreens Boots Alliance, the global drugstore chain and the firm’s third-largest long position, returned 2.6 percent.
On the other hand, shares of Liberty Broadband Corp., which owns media properties, fell more than 7 percent last month. That position was initiated in the second quarter and immediately became the firm’s second-largest long.
Third Point is more of a multistrategy fund that sometimes engages in high-profile activist campaigns. The fund entered October much more bullish than in recent periods. It was 54 percent net long in its long-short book, up from 47 percent just the previous month. Most of the long-short assets were invested in stocks whose market capitalization exceeded $10 billion. In addition, Third Point’s credit book was 29 percent net long.
Most of the fund’s overall exposure is in what it calls “Americas.” In its second-quarter letter, dated July 26, Third Point told clients it was “content to have our capital in a well-diversified portfolio of US-centric credit and equities.”
It had noted that dividend yields were greater than the 30-year bond yield, a Federal Reserve rate hike was unlikely, and earnings were poised to be boosted by low energy prices.
