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The Top 12 Hedge Funds of 2012

Although hedge funds badly lagged the stock market's first quarter rally, a dozen standouts managed to outperform.

The global markets surged during the first three months of 2012, but most hedge funds missed the party.

Reuters pointed out today that although a number of prominent U.S. hedge funds enjoyed a stellar first-quarter, much of the sector is still struggling to beat the Standard & Poor's 500 index. The S&P 500 ETF climbed 12.7 percent during the period while hedge funds sucked wind with a mere 2.3 percent gain, according to data compiled by Bank of America Merrill Lynch.

Nevertheless, there are standouts whose stock picks easily bested the fortunate few that Reuters cited today. Insider Monkey pinpoints the top 12 long/short equity hedge funds of 2012.

From Insider Monkey:

1. King Street Capital – Brian Higgins: King Street is the best hedge fund in our database. Their 6 stock picks returned 41.7%.

2. Fairholme – Bruce Berkowitz: Bruce Berkowitz is showing investors (and John Paulson) that investing is a marathon. After last year's terrible performance, his 16 stock picks returned 38.2% during the first quarter.

3. John Hurley – Cavalry Asset Management: Cavalry Asset Management's 16 technology stock picks gained an average of 37.1% during the first quarter.

4. ESL Investments – Eddie Lampert: Lampert's top picks pulled back a little bit since we last compiled the list of best hedge funds. However his 8 large-cap stock picks returned 36.9% during the first quarter.

5. Anchorage Advisors – Kevin Michael Ulrich: Anchorage Advisors' 8 large-cap picks returned 34.9%.

6. Martin Hughes Toscafund Asset Management: Hughes 5 large-cap picks gained 33.1%.

7. Michael Katz Glenrock Global Partners: Katz's 13 large-cap picks returned 32.1%.

8. Chou Associates Management: Francis Chou managed to find 17 large-cap stocks that can deliver a 31.9% return in the first three months of 2012.

9. Algebris Investments: Eric Halet and Davide Serra's fourteen large-cap stock picks gained 31.1% during the first quarter.

10. Centerbridge Partners: Mark Gallogly's 5 large-cap stock picks returned 31.12%.

11. Litespeed Management: Jamie Zimmerman's 7 stock picks gained 31.06%

12. Round Table Investment Management: Ian Banwell's six stock picks returned 30%.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio
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