US Hedge Funds Experience Stormy July

NEW YORK - After several months of strong performances by many of the best known names in the $2 trillion hedge fund industry, July was a let down.

Lee Ainslie's $2.9 billion Maverick Fund inched up 0.14 percent in July. Andrew Feldstein's BlueMountain Credit Alternatives Fund moved 0.67 percent higher. And one of David Tepper's Appaloosa portfolios gained 0.89 percent.

But the figures were atypical. The Dallas-based Maverick fund, for example, has gained almost 20 percent this year, according to data from HSBC's private bank. It is a major turnaround for Ainslie, who lost 14.85 percent in that portfolio in 2011.

Other funds that managed to produce only small returns last month, such the $4 billion Bluemountain credit fund and Tepper's almost $5 billion Palomino fund, are still up 10.92 percent and 14.31 percent, respectively, for the year through July 31, HSBC data showed.

The average hedge fund gained 1.05 percent in July, according to Hedge Fund Research, trailing the broader stock market, which rose 1.26 percent. Hedge funds have gained 2.88 percent this year, on average, while the S&P 500 stock index is up 7.41 percent.

"The returns were not terribly high in July, but according to our data, 75 percent of all hedge funds that have so far reported a return for July have reported a profit," said Sol Waksman, president and founder of BarclayHedge. "An up month, but not a barn-burner."

Several other managers who have posted strong returns through in 2012 barely made it into positive territory last month as the U.S economy showed signs of slowing and the euro zone crisis continued to plague global financial markets.

James Simons' Renaissance Institutional Equities fund rose only 0.32 percent in July, although the fund is up almost 10 percent for the year. Third Point's Ultra fund, managed by Daniel Loeb, is up 8.98 percent this year, but only crept up 0.2 percent last month.

Other managers posted stronger performance over the period.

Longtime investor Michael Hintze, whose CQS fund was up almost 20 percent for the year through July 31, gained 2.25 percent in July. Grandmaster Capital, run by Patrick Wolff, a former managing director at Peter Theil's Clarium Capital, is up 18.14 percent for the year after gaining 3.8 percent last month, an investor note reviewed by Reuters showed.

Meanwhile, Steven Cohen's SAC Capital has risen about 6 percent this year through July, according to someone familiar with the numbers.

For other brand name hedge funds, 2012 has not been as sweet.

A $7.6 billion Caxton Associates fund is still down 3.42 percent, even though it rose 0.84 percent last month.

John Paulson saw more losses in his Advantages funds in July, although his merger arbitrage-focused Enhanced Fund is in the black, with gains of 6.71 percent after rising 1.42 percent in July.

And one of Louis Bacon's hedge funds, the Moore Emerging Equity Fund run by Greg Coffey, dropped 13.35 percent through July 1, even after a small gain last month.

"Prior to the month-end rally, July was challenging for directional equity strategies and those with a long bias lagged significantly," hedge fund tracking firm evestment | HFN noted this week.

Reporting by Katya Wachtel