Bearish Bets Drive Outperformance for Some Funds

New York (HedgeCo.net) – With the market grinding sideways for most of this year and with the third quarter being so bad for stocks, it isn’t surprising that some hedge funds that have outperformed in 2015 are funds that have had bearish bets in the right places.

A recent report from Reuters pointed out several hedge funds that experiencing good returns in a year where the average hedge fund is only up 0.4% through the end of October and the S&P was only up 2.7 percent. The funds highlighted in the article included Passport Capital, Maverick Capital, Glade Brook Capital and Pagoda Asset Management. Passport’s main fund was up 12.8% YTD through the end of October and the firm cited short positions in the basic materials sector for boosting its third-quarter performance, a quarter which saw the fund gain 6.7%.

Maverick Capital’s main fund is up approximately 16% on a YTD basis through the end of October and according to founder Lee Ainslie, their short positions were very successful in the third quarter. “Our short investments were profitable in every industry sector and each region in which we invest,” Ainslie wrote in a letter to investors summarizing the third quarter.

Glade Brook gained 2.7% in the third quarter and is up approximately 12% on the year. The fund credited short positions on traditional retailers and traditional media companies for the success from the bearish side.
For Pagoda, their main fund is up approximately 14.5% through October and it gained 5.1% in the third quarter thanks to short positions in the leisure and retail sector.

Rick Pendergraft
Research Analyst
HedgeCoVest