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Hedge Funds

A Bet On Natural Gas Burned Hedge Funds In 2015

by posted 3years ago 7241 views
One of the core skills that fundamental long/short hedge fund managers use to generate alpha is the ability to invest in securities that outperform their benchmarks. Paired with an ability to short stocks that underperform, managers create alpha which justifies their management and performance fees (in theory). That theory did not work out in 2015. Plagued by a string of bad bets in virtually every sector, hedge funds generated negative alpha picking securities on the long side. This translated into roughly 430bps of underperformance of our HFU (Hedge Fund Universe, which lost 200bs) compared to the S&P 1500 (which is...