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US hedge funds' favourite stocks lose more than rivals
[BOSTON] Publicly listed companies that are popular with US hedge funds lost more money than sector rivals when stock markets tumbled in the last few months, new data from research firm Symmetric.io show.
Hedge fund managers, who often promise strong returns in all markets, were caught off guard when stocks sold off on fears of slower growth in China, falling energy prices, and worries about a potential US interest rate hike.
Some funds are nursing double digit declines, their deepest since 2008, according to the data that Symmetric will release to clients on Tuesday. Reuters reviewed the data on Monday.
David Einhorn's Greenlight Capital is off 17 per cent while Larry Robbins' Glenview Capital is down 13 per cent. The Standard & Poor's 500 index is off 2 per cent.
"Companies with the highest concentration of hedge fund ownership are performing 6 per cent worse than the sector they are in," Symmetric Managing Director Sam Abbas said.
Part of the problem could be that stocks fall more as hedge funds look to exit losing positions, creating a sort of vicious cycle, Mr Abbas said.
The stock of Brookdale Senior Living, a favorite among hedge funds, was a major loser.
In May, billionaire investor Larry Robbins touted the senior housing company as one of his best ideas at the Sohn Investment Conference, saying that one of the easiest things is to bet on an aging population.
He owns 11.6 million shares, making him Brookdale's seventh largest investor.
Whether people took Mr Robbins' advice and piled in is unclear, but 43 per cent of Brookdale's outstanding stock is owned by hedge funds including Barry Rosenstein's Jana Partners, Discovery Capital Management and Scopia Capital Management.
Since the presentation, Brookdale's stock has fallen 35 per cent, creating pressure for Glenview whose portfolio is down double digits after a 25 per cent gain in 2014.
Another company which lost hedge fund investors a lot of money this year is renewable energy company SunEdison, Symmetric.io data show.
More than half of its owners are hedge funds like Einhorn's Greenlight, Glenview, and Leon Cooperman's Omega Advisors. And its stock price has tumbled 69 per cent since the end of June when the last hedge fund filings were made.