[BOSTON] The hedge fund industry's biggest performances in 2014 came from some of its smallest, least-known players, according to data from research firm Simplify.
The results add heft to years of studies by industry researchers and academics showing smaller funds tend to beat the industry's big-name titans, in part because their managers often provide more focus and take bigger risks.
Mumbai-based Alchemy Capital Management ranked No. 1 on Simplify's list as manager Hiren Ved's US$53 million long-short equity fund gained 63 per cent through November, with a focus on Indian stocks, according to Simplify. More recent numbers are not yet available.
The second and third spots went to San Francisco-based funds: Oleg Nodelman's US$206 million long-short equity fund EcoR1 Capital Fund posted a 62.2 per cent gain, while Kurt von Emster and Behzad Aghazadeh's US$182 million venBio Select Fund surged 61.8 per cent, according to the survey.
Other funds on Simplify's top-twenty list were also mostly on the smaller side, generally overseeing less than US$1 billion. Paul Mulvaney's US$198 million Mulvaney Global Diversified Program gained 53 per cent, while Darren Upton's US$660 million ISAM Systematic Fund jumped 48 per cent.
But there was at least one big, household name on the list, too: William Ackman's US$18 billion Pershing Square Capital Management clocked in with a 38.6 gain for one of its portfolios, lifted by a big gain on drug firm Allergan Inc.
The list of top performers included stock pickers, portfolios relying on computers for trading signals, and activists, making it hard to draw one investment lesson, said Brian Shapiro, who founded Simplify. "There isn't one unifying theme to this year's top performing funds," he said. "But big or small, these guys really earned their fees this year." The research was compiled late last week and seen by Reuters on Monday.
The huge gains for the top performers came during a generally lackluster year in the industry, with average returns through November amounting to about 4 per cent.
Some industry titans who put up top numbers in the past had trouble keeping pace in 2014. Paul Tudor Jones' Tudor BVI fund gained 4 per cent through early December while Alan Howard's Brevan Howard fund slipped nearly 1 per cent through November.
John Paulson, whose bet on gold and against the housing market earned him billions through the financial crisis, saw his Advantage fund drop 17 per cent through November.