WSJ – Several of the hedge-fund industry’s biggest names have been underperforming the broad market, underlining the difficulties investment managers–even experienced ones–faced in the second quarter as they grappled with recurring concerns over Europe and sputtering global economic health.
Elliott Management, in letter to investor dated July 31, described the three months ended June 30 as a “frustrating quarter” where intense price action “forced some firms to unwind trades, further exacerbating underlying price movements.”
Elliott Management Corp., founded by Paul Singer, said mild declines in the second quarter slashed gains for the first six months of the year to between 3.6% and 4.8%, while Seth Klarman’s Baupost Group LLC said returns were reduced to 1.39% after a second-quarter fall, according to letters the managers sent to their respective investors. The Standard & Poor’s 500 index rose 9.49% for the first half of the year.
“While the overall return was nothing to write home about, our underlying portfolio became increasingly attractive during the first half of 2012,” Baupost wrote. The manager said recent volatility allowed the fund to sell investments at gains and buy stocks–sometimes the same ones the firm just sold–at lower prices.
Elliott Management also shared the same sentiment.
