- Insider complied a list of 11 managers to know as the new year approaches.
- The list includes big-name managers, new launches, and under-the-radar funds.
- 2021 was a stressful year for hedge funds thanks to retail traders and Covid variants.
The year 2021 was not a quiet one for hedge funds.
Retail traders coordinated short squeezes. Variants spooked markets. Capital in private companies set new record, and SPACs attracted everyone from Bill Ackman to Shaq.
In the end, managers — for the most part — made it out ok. The average fund was up just under 9% through the first 11 months of 2021 after a nasty November, which tripped up managers like Tiger Global and Whale Rock. This figure trails the S&P 500, but is still close to matching last year’s strong industry-wide performance with a whole month to go.
There are plenty of funds though that soared or sunk this year for a variety of reasons. From big-name managers to under-the-radar stars to new launches, Insider talked with industry experts to get a sense of which funds to keep a close eye on next year.
Table of Contents
1. Perceptive Advisors
Biotech was slammed this year, and the most prominent hedge fund in the space was not spared any pain. Billionaire Joseph Edelman’s Perceptive Advisors has lost more than 30% in its flagship Life Sciences fund through the end of November, as previously reported by the Wall Street Journal. Perceptive though has a way of bouncing back quickly. Following a drop of 8% in 2018, the firm’s flagship returned more than 50% in 2019. With the firm’s many different arms — including venture capital funds and several SPACs — Perceptive is unlikely to be down for long.
2. Elliott Management
Fresh off its exciting Twitter campaign that culminated in a tech billionaire stepping down, Elliott Management is not resting. The $48 billion activist fund is pushing a pair of UK companies — drugmaker GlaxoSmithKline and energy firm SSE — to accelerate their growth plans, and potentially spin off units. In the states, the firm’s private-equity arm, Evergreen Coast Capital, is going big on education technology and scored a big win this year when it sold athenahealth for $17 billion.
3. Mala Gaonkar’s new fund
One of the industry’s most interesting characters is hanging out her own shingle. Mala Gaonkar, the long-time Lone Pine executive and portfolio manager, left the Greenwich-based Tiger Cub to start her own fund earlier this year. Gaonkar, who focused on technology, media, telecomm, and emerging markets companies, will be one of the several female hedge-fund founders who is planning to launch next year (though she’ll be the only one who has created art exhibitions with Talking Heads frontman David Byrne).
4. Gemsstock Limited
Founded in 2014, London-based Gemsstock is not yet a brand name in the macro space, but should be on LPs’ radar going into the new year. After posting gains above 50% last year, the fund has returned close to 16% through October of this year, according to HSBC’s Hedge Weekly. Cofounder Al Breach was known as a star Russia strategist when he was at UBS, which could be a critical background to have as Russian president Vladimir Putin threatens Ukraine and US President Joe Biden counters with strong rhetoric.
The biggest hedge fund launch ever has not had any trouble attracting portfolio managers or raising capital, but the performance has yet to match that of its main multi-strategy rivals. ExodusPoint, according to a stat sheet sent out in early December, has returned a little over 3% for the year through November, trailing the industry average (though the manager was positive in a tough November). The firm’s hiring has continued apace, as new portfolio managers are added every month in different regions around the world, though the firm did lose two top technology and data executives earlier this year.
6. Melvin Capital
The biggest story in hedge funds this year happened in 2021’s first month. Gabe Plotkin — who had ridden years of top-notch returns to a sterling industry reputation and a minority stake in the NBA’s Charlotte Hornets — was caught off guard by a horde of retail traders banding together prop up the price of video-game retailer GameStop’s stock, which Plotkin’s Melvin Capital had bet against. The result was billions of dollars lost for Plotkin’s investors in a matter of days, and massive capital infusions from Citadel founder Ken Griffin and Plotkin’s old boss, Steve Cohen. He has spent the year chipping away at the hole, and is up nearly 29% from the start of February through the end of November, according to a source familiar with the firm. Unfortunately, that still puts his losses for the year at 41% through November. How he bounces back next year will be of great interest for LPs and the retail investing community.
7. Coast Capital
A run of strong performance — 21% in 2019, 58% last year, 28% this year — has small activist fund Coast Capital on the radar of industry watchers. The $350 million manager, run by former Jana managing director James Rasteh, has focused recently on European opportunities, including UK transportation company FirstGroup and British software company BluePrism, which the fund believes should relist in the US to drive its valuation up closer to its American peers.
Alex Karnal’s buzzed-about healthcare manager has yet to launch, but industry watchers are still excited for the former Deerfield managing director’s new firm. Karnal, who played quarterback for MIT, is planning for the fund to be a hybrid offering, with investments in public and private securities. He brought on Brian Kreiter, a former executive at Bridgewater Associates, to lead the fund.
9. Anson Funds
Anson Funds, run by Moez Kassam, has had two years of top-tier performance back-to-back. The manager, which has offices in Toronto and Texas, was up 45% last year, and finished the third quarter of 2021 up over 40%. However, things are not perfect at the equity manager. The firm was named by Bloomberg as a manager that the Department of Justice is looking into as a part of wider short-selling probe. Other managers named in the Bloomberg report include prominent short-sellers Muddy Waters Capital and Andrew Left’s Citron Research.
Billionaire Lee Ainslie’s long-running Tiger Cub has fared just fine this year, despite losing its top stock-picker Andrew Warford in February. The firm has bested the average fund this year in its flagship offering and was up over 15% through November. And like peers such as Viking Global, Lone Pine, and Tiger Global, Maverick’s private investment book has been growing under David Singer. According to the Maverick Ventures site, the firm has more than 53 private companies in its portfolio, including Artemis Health and mortgage start-up Snapdocs.
11. Greenland Capital
The resources and capital needed to start a new multi-strategy fund from scratch are serious, but it’s a good bit easier when you’ve got a serious backer who shares your last name. Michael Englander, son of billionaire Millennium founder Izzy Englander, is starting his own multi-strategy fund, Greenland Capital, with at least $300 million in capital from a group that includes his father. The firm will initially raise more than $1 billion and give young investors a chance to manage a portfolio, building off the younger Englander’s work running Millennium’s Phenom program, which developed promising young talent at the massive hedge fund.