Ray Dalio, Adam Levinson, and other hedge fund bosses posted record losses in an 'epically turbulent' March
Hedge fund managers including Ray Dalio and Adam Levinson suffered record losses in March as the novel coronavirus hammered their portfolios. Around 75% of hedge funds posted losses last month, including nine in 10 credit funds, Bloomberg estimated based on preliminary data. Dalio's Bridgewater Associates lost 16% in its flagship fund, Levinson's Graticule Asset Management recorded a 9% drop in its macro fund, and Michael Hintze's CQS Directional Opportunities Fund fell by a third, Bloomberg said. "Many funds are going to be throwing up gates and going into survival mode," one hedge fund chief told Bloomberg. Visit Business Insider's homepage for more stories.
Ray Dalio, Adam Levinson, and other hedge fund bosses posted record losses in March as the novel coronavirus pandemic tore through markets in what one fund manager called an "epically turbulent" month. Around 75% of hedge funds stomached losses last month, including nine in 10 credit funds, according to a Bloomberg analysis of preliminary data. Equity hedge funds delivered their second-worst performance in at least three decades, Bloomberg reported, citing Hedge Fund Research data. March was a "devastating" month for the industry, Ed Rogers, the boss of Rogers Investment Advisors in Tokyo, told Bloomberg. "Many funds are going to be throwing up gates and going into survival mode." Read more: Chris Davis is so good at picking stocks that he made clients $1 billion on a single trade. He breaks down 3 stocks poised to deliver as the coronavirus causes market mayhem. Bloomberg, relying on a mix of reporting and client letters, highlighted several funds' performances in March:
Dalio's Bridgewater Associates, the world's biggest hedge fund with about $160 billion in assets, suffered a loss of roughly 16% in its flagship fund after wagering that markets would rise. Levinson's Graticule Asset Management registered a 9% drop in its macro fund as equity and fixed-income bets disappointed. In a letter to investors, Levinson described March as "epically turbulent." Michael Hintze's CQS Directional Opportunities Fund tumbled by a third, almost triple its previous record monthly decline. Another of its strategies, focused on asset-backed securities, lost more than 40%.
Read more: Bank of America breaks down how to build the perfect post-coronavirus portfolio — one designed to recover losses and get ahead of an eventual economic recovery Other hedge funds had a much better month. Mark Spitznagel's "black swan" fund, Universa Investments, posted a return of more than 3000%, according to a client letter obtained by Business Insider. Bill Ackman's Pershing Square posted an 11% gain in March after making a $2.6 billion gain on credit-default swaps that offset losses in its equity portfolio. Ruffer, a London-based fund nicknamed "50 Cent," also racked up $2.6 billion last quarter by betting on volatility to spike and equities, credit, and gold prices to fall, again offsetting its losses elsewhere.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
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Investors are pulling up to $900 million from Anthony Scaramucci's SkyBridge after rocky performance and a sell recommendation from Merrill Lynch
About a quarter of SkyBridge Capital's investors asked to take their money out of the firm's...About a quarter of SkyBridge Capital's investors asked to take their money out of the firm's flagship fund, which will translate to between $800 million and $900 million leaving, founder Anthony Scaramucci told Business Insider. After Merrill Lynch recommended investors leave the fund of funds in late June, SkyBridge lost about half of its Merrill Lynch assets, Scaramucci said. SkyBridge brought in $115 million in June from Japanese institutions and Middle Eastern family offices. Visit Business Insider's homepage for more stories. About a quarter of investors in Anthony Scaramucci's flagship fund have asked for their money back in recent weeks, the SkyBridge Capital founder told Business Insider. SkyBridge's fund of funds, which invests wealthy people's money into other hedge funds, was down 24.7% in March after a big debt bet, which led to significant redemptions in April and staff changes under its two portfolio managers. Credit-focused hedge funds took a big hit in March and were down 23.2% on average, according to Hedge Fund Research. SkyBridge is still counting the latest round of redemption requests, which were due on Friday. Scaramucci said investors asked to pull out between $800 million and $900 million. He said the fund was up over 9% since April 1. SkyBridge also saw some inflows in the second quarter, including about $115 million in June from Japanese institutions and family offices in the Middle East. Scaramucci said SkyBridge should have about $7 billion in total assets under management after the redemptions. After the fund's disastrous March performance and subsequent redemptions, SkyBridge sold some of its investments, including in EJF Capital and Hildene Capital Management, and invested in some of the industry's biggest funds: Canyon, Bridgewater, Point72, Renaissance, Brevan Howard, and Oaktree's Value Opportunities Fund. Investors who asked for their money back will receive it by the end of September. Read more: Here's how Anthony Scaramucci's SkyBridge offloaded stakes in 2 funds after credit markets seized up Half of Merrill Lynch money walked In April, Citigroup cut ties with the firm, which could lead to clients pulling $100 million from SkyBridge, The Wall Street Journal reported. That story also said Merrill Lynch had recently decided against making new investments in SkyBridge. In late June, Merrill Lynch advised clients to sell the fund, leading Scaramucci to send a six-page letter to Merrill President Andy Sieg, Business Insider previously reported. SkyBridge will lose about half of its Merrill-linked assets through the latest redemption round, Scaramucci said. "We have a lot of long-term investors," he said. "When you're with some of these wirehouses, they have a tendency to sell at the bottom." Morgan Stanley recommended clients hold the fund but not sell it. Scaramucci said other firms had "buy" recommendations. SkyBridge recently switched its redemption timeline for the fund of funds from quarterly to twice a year, so investors can next ask to take their money out in December. Read more: Big-name credit funds like Canyon Partners, Angelo Gordon, and CQS got smacked in March, but some specialized credit investors are set to rake in cash as the chaos presents big opportunitiesSEE ALSO: POWER BROKERS OF DISTRESSED CREDIT: Meet 11 Wall Street stars trading busted bonds, bankruptcy claims, and other fire-sale securities DON'T MISS: LEAKED MEMO: Anthony Scaramucci mourns his relationship with $2.2 trillion Merrill Lynch after it downgraded SkyBridge's main fund NEXT UP: Here's how Anthony Scaramucci's SkyBridge offloaded stakes in 2 funds after credit markets seized up Join the conversation about this story » NOW WATCH: What it takes to be a PGA Tour caddie
Many so-called “quantitative funds” that mine historical data to make trading decisions fared poorly in March,...Many so-called “quantitative funds” that mine historical data to make trading decisions fared poorly in March, when stocks fell sharply amid coronavirus fears.
LEAKED MEMO: Anthony Scaramucci mourns his relationship with $2.2 trillion Merrill Lynch after it downgraded SkyBridge's main fund
SkyBridge founder Anthony Scaramucci sent a strongly-worded memo to Andy Sieg, the president of Merrill Lynch...SkyBridge founder Anthony Scaramucci sent a strongly-worded memo to Andy Sieg, the president of Merrill Lynch Wealth Management, on Thursday after the company downgraded its fund of hedge funds. SkyBridge was hit with redemption requests after its fund suffered a 24.7% loss in March. Scaramucci said Merrill Lynch erred in a recent due diligence report and that it inaccurately told its advisers that SkyBridge lied. Sign up here for our Wall Street Insider newsletter. Anthony Scaramucci sent a strongly-worded letter to the president of Merrill Lynch Wealth Management on Thursday after the $2.2 trillion wealth manager recommended dumping SkyBridge Capital's fund of hedge funds. In Thursday's six-page letter to Andy Sieg reviewed by Business Insider, Scaramucci acknowledged his fund's performance suffered in March – it was down 24.7% after a big debt bet, which led to significant redemptions and staff changes under its two portfolio managers. But he highlighted that the fund had its best second quarter – up 6.49% – since 2012. Credit-focused hedge funds took a big hit in March, on average down 23.2%, per Hedge Fund Research. The only worse-performing strategy in the volatile month were activist funds, which were down 25.3%. Data for the second quarter, which ended Tuesday, have not yet been released. In April, Citigroup cut ties with the firm, which could lead to clients pulling $100 million from SkyBridge, the Wall Street Journal reported. The story also said that Merrill Lynch had recently decided against making new investments in SkyBridge. With the recommendation to sell, Merrill Lynch's clients currently invested in SkyBridge could be next to exit the firm's Series G fund, its main product that's geared toward wealthy individuals. SkyBridge managed $9.3 billion as of March 30. A spokeswoman for Merrill Lynch said: "We have full confidence in the rigor and expertise of our due diligence team. We have received the letter from SkyBridge and plan to respond to them directly." Scaramucci and SkyBridge did not respond to requests for comment. "Yet another casualty of the pandemic" Scaramucci said Merrill Lynch published an inaccurate due diligence report on June 26. These due diligence reports signal to its financial advisers how they should think about various investment strategies on behalf of their clients. Scaramucci called the firms' relationship "yet another casualty of the pandemic," writing that the report "reflects a breakdown in communication" between the firms – one he didn't think would happen if executives had met in person. After the fund's disastrous March performance, SkyBridge sold some of its investments, including in EJF Capital and Hildene Capital Management, and invested in some of the industry's biggest funds: Canyon, Bridgewater, Point72, Renaissance, Brevan Howard, and Oaktree's Value Opportunities Fund. Those changes shifted the fund from 81% credit on March 1 to 74% on July 1, with more distressed corporate credit and less structured credit. Scaramucci said that Merrill Lynch's report criticized the SkyBridge fund for moving away from a "highly-concentrated, thematic" strategy, which Scaramucci said is not true. His other complaints included issues with Merrill Lynch's assessment of the SkyBridge's due diligence, its secondary sales communication, and its Oaktree investment, among other issues. Scaramucci also criticized Merrill Lynch for refusing to speak with him and another SkyBridge executive. Scaramucci said Merrill Lynch staff have told financial advisors that SkyBridge lied in due diligence. He said it felt like Merrill Lynch's due diligence team "spent the last three months playing 'gotcha' in search of a lie. They came up empty handed," he wrote. Have a tip? Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email, or Twitter DM. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop. Read more: $2.5 billion Tiger Cub Valinor Management is closing — it's the first multi-billion-dollar hedge fund to wind down since the pandemic started Meet 2019's Rising Stars of Wall Street from firms like Goldman Sachs, Blackstone, and Apollo shaking up investing, trading, and dealmaking SEE ALSO: The next big venture-capital gold rush may be in Opportunity Zones, dubbed the 'emerging markets of the United States' SEE ALSO: Big-name credit funds like Canyon Partners, Angelo Gordon, and CQS got smacked in March, but some specialized credit investors are set to rake in cash as the chaos presents big opportunities Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America