Will the month of May prove to be an inflection point when it comes to 2012 hedge fund performance?
After a decent start to the year, hedge funds definitely hit a rather jarring speed bump. The average fund lost nearly 3 percent, the worst month since September. That's not as bad the Standard & Poor's 500 index, which fell 6 percent for the month, however.
Some of the big losers include John Paulson, who is struggling again after a tough 2011 that saw his flagship funds cut in half. According to Reuters, "His gold fund tumbled 12.7 percent in May and is now off 22.5 percent for the year. But his credit fund rose 0.93 percent in May, and is up 5.26 percent for the year. Meanwhile, losses in the closely-watched Paulson Advantage Plus fund were limited to only 0.6 percent. For the year, the fund is off 10 percent. Other Paulson funds recorded losses in May but still managed to keep returns in positive territory for the year. The Enhanced fund lost 1.3 percent last month and is up 10.7 percent for the year. The Recovery fund lost 2 percent for the month, and has returned over 5 percent for the year. The firm's merger arbitrage fund is up 5.2 percent for the year after losing 0.7 percent in May."
You do have to ask just how bad performance has been for Paulson's gold-denominated funds. Paulson is hardly alone in his suffering. William Ackman's Pershing Square Capital Management fell 7 percent, and Daniel Loeb's Third Point Partners dipped 2.6 percent. Many managers are still in the black for the year. Hopefully, that state will hold for the next six months.
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