July returns give some hedge funds something to cheer about

By Svea Herbst-Bayliss

BOSTON (Reuters) - After months of disappointing returns, hedge funds finally have something to brag about, posting their best returns of the year in July when stocks rebounded.

Several activist hedge funds that push management for changes such as buying back stock boasted double digit gains while other prominent firms posted smaller gains, helping shrink some of the losses they have suffered this year.

Marcato Capital Management and Engaged Capital each gained 10.4 percent in July and Sachem Head Capital Management climbed 3.2 percent. Jana Nirvana gained 2.9 percent while its sister Jana Partners fund climbed 1.9 percent, investors in the funds said.

Citadel's Wellington fund gained 2.7 percent while its Global Equities fund rose 2.12 percent in July, a person familiar with the numbers said.

Many hedge funds are still compiling monthly returns but analysts at Bank of America say preliminary calculations show an average 1.3 percent gain in July, marking the industry's best monthly showing this year.

U.S. funds that concentrate on selecting stocks gained nearly 1.9 percent last month, posting their biggest gains since October 2015 when they rose 2.4 percent, Bank of America said.

Still 2016 has largely been a disappointing year, shaped by an early sell off triggered by fears over Chinese growth and the direction of U.S. interest rates and rattled again when Britain voted in June to leave the European Union.

"Part of the difficulty this year has been hedge funds crowding into the same names," said Mark Doherty, a managing principal at consulting firm PivotalPath. Computer driven hedge funds known as trend followers "were correct in Brexit and clients are asking us about that space now," he added.

For some funds, July's gains shrunk losses but many are still off. Jana Partners is down 4 percent for the year while Marcato is off 2.7 percent and Sachem Head is off nearly 1 percent for the year.

Some prominent investors are nursing bigger losses, with William Ackman's Pershing Square Holdings Ltd fund off 19 percent and Crispin Odey's Odey Asset Management off nearly 30 percent.

But there are winners for the year as well with Parag Vora's HG Vora extending gains for the year to 6.9 percent with a 2.5 percent gain in July.

Similarly some computer driven funds are up as well. AlphaQuest Original, a systematic trader of commodities, currencies, equity indexes and bonds gained 2.1 percent last month, extending its gain for the year to 21.1 percent.

(with additional reporting by Maiya Keidan in London; Editing by Andrew Hay)

You May Also Be Interested In

• PENN Entertainment (PENN) Climbs after Hedge Fund Greenlight Takes Stake
• Israel's Netanyahu says 'more has to be done' to stop pro-Palestinian protests on US campuses
• IBM to buy HashiCorp in $6.4 billion deal to expand in cloud