Albert Friedberg is a little-known commodities trader who manages $2 billion in Toronto. Last year, during one of the worst 12-month stretches in the history of the hedge fund industry, Friedberg outperformed just about every big shot trader on the planet. His Friedberg Global-Macro Hedge Fund returned 40.84% and Friedberg landed in the 34th position on Forbes’ list of the 40 Highest-Earning Hedge Fund Managers.
But so far in 2012 Friedberg has suffered a reversal of fortune. His Friedberg Global-Macro Hedge Fund was down 19.46% in the first two months of the year. Friedberg’s performance tends to be volatile—his hedge fund last year suffered losses of 10.28% in January and 21.76% in October and he still hit the ball out of the park—but Friedberg has started 2012 out badly.
Part of the reason it might be tough for Friedberg to make up ground this year is that markets around the world have rallied. The U.S. stock market, as measured by the S&P 500 index, has returned 12.7% year-to-date. It returned 9% in the first two months of the year.
Friedberg is not the only hedge fund manager starting the year lagging the broader U.S stock market. Bank of America Merrill Lynch reports that its investable hedge fund composite index is only up by 2.84% in 2011. There are some signs that investors have had enough--investors redeemed $15.2 billion from hedge funds in January, according to Barclays Hedge and TrimTabs, the highest outflow since the start of the credit crisis.
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Colm O’Shea, a former Citigroup trader who also worked for George Soros’ Quantum Fund, earned an estimated $100 million in 2011, but so far in 2012 O’Shea’s Comac Global Macro Fund has returned -5.36% net of fees. Boaz Weinstein made an estimated $90 million last year on the strength of his Saba Capital Offshore, but that hedge fund is down 1.09% net to start off 2012.
Many of last year’s top earners have started 2012 off flat or up slightly. Billionaire Alan Howard, who ranked 7th running one of Europe’s biggest hedge fund firms with estimated earnings of $400 million, has driven the $26 billion hedge fund he manages to net returns of 1.12% during the first two months of the year. Billionaire Israel Englander made an estimated $190 million in 2011 and so far this year his Millennium International has returned 2.63% net of fees. Andreas Halvorsen made an estimated $200 million in 2011 and his Viking Global Equities is up about 3.4% to start the year. Billionaire Daniel Och’s Oz Master Fund was up 3.15% for the year at the end of February.
It’s early in the 2012 game. Last year the U.S. stock market zoomed up at the start of the year, collapsed and then recovered to end 2011 about where it started. The average hedge fund fell by 5% last year.
There are some guys you wouldn’t want to bet against. James Simons, the billionaire founder of Renaissance Technologies, earned $2.1 billion last year. He is officially “retired” but he continues to play a role at the firm and enjoy its spoils. The firm’s Renaissance Institutional Equities hedge fund has returned a net of 4.43% so far this year and its Renaissance Institutional Futures Fund has eked a net return of 0.32%.
Still, boring low-fee index funds continue to run circles around many investing titans.
