Billionaire stock pickers David Einhorn, Daniel Loeb and Barry Rosenstein on Wednesday told their wealthy investors they lost money in September as market turmoil inflicted more pain on some of America’s most prominent hedge funds.
The three men were among the first to tabulate their monthly performance numbers and their losses suggest that even bigger declines will be reported by other hedge funds in the days ahead, after global markets tumbled this month amid persistent fears that China’s economy is slowing.
Einhorn’s Greenlight Capital fund fell 3.6 percent in September, leaving the $11 billion firm off 17 percent for the year to date, two people familiar with the figures said on Wednesday.
Loeb’s $17.5 billion Third Point fell 4.8 percent in September. It is down 3.7 percent for the year while his more aggressively positioned Third Point Ultra fund lost 6.7 percent, putting it off 7.5 percent for the year, a person familiar with the numbers said.
Rosenstein’s $11 billion Jana Partners lost 3.8 percent in September and is now off 6.6 percent, a person familiar with the numbers said.
Their losses largely mirrored the 3.52 percent decline in the Standard & Poor’s 500 index in September, but that is certain to raise questions about the funds’ hefty fees and promises to protect investors, including pension funds, in down markets.
At Greenlight, Einhorn is delivering some of the industry’s worst numbers, thanks largely to soured bets on renewable energy company SunEdison and Consol Energy, and a losing gamble on Micron Technology.
Einhorn is now on track to post his first down year since the financial crisis in 2008 - a big blow for a manager who had been delivering average annual returns of about 20 percent.
Rosenstein’s biggest bets on Qualcomm, Walgreens Boots Alliance and Hertz all saw losses, and he was also hurt by a 24 percent sell-off in pharmaceutical company Valeant.
At Third Point, declines in Amgen and Allergan weighed on performance.
As most managers are still finalizing their monthly numbers, preliminary data from industry tracking firm Hedge Fund Research, however, show that the average fund lost 2.5 percent in September, leaving it off 3.5 percent for the first nine months of the year, versus the Standard & Poor’s 500 index’s 7.27 percent drop.
Investors in Einhorn’s fund have been disappointed most of the year, but several said they are sticking by him, for now.—Reuters