Stock-oriented hedge funds once again reminded investors they are not your father’s rapid, aggressive traders, but rather closer to buy-and-hold investors. Turnover of hedge fund positions hit a new low of just 27 percent in the second quarter, according to Goldman Sachs’ analysis of the recent 13F filings. Turnover has now fallen in five of the past eight quarters after topping around 45 percent in 2008, just before stock prices collapsed during the bear market.
Turnover among the largest quartile of holdings fell to a very low 12 percent in the second quarter. The low turnover rate in general suggests that following the 13F filings could be a valuable strategy even though most hedge fund report their holdings at the deadline, 45 days after the quarter ends. Of course, we have also repeatedly pointed out several flaws or shortcomings in following the stock filings, mostly due to the number of hedge funds that take advantage of the SEC’s waiver provision that allows investors under certain circumstances to delay disclosing key holdings.
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William Ackman’s Pershing Square Holdings, the publicly traded vehicle managed by his New York-based firm Pershing Square Capital Management, is down 2.5 percent this month through August 18, cutting its gain for the year to 7.4 percent. The performance, however, does not capture how the activist manager in the last three days of last week during the massive market selloff.
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Interesting tweet from Andor Capital Management’s Dan Benton Friday, commenting on the current stock market selloff: “‘Bull markets climb a wall of worry’; ‘Bear markets slide down a slope of hope.’ I worry that more investors are hopeful.” We always wind up knowing in hindsight.
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Hedge fund industry assets climbed 0.35 percent in July, to $3.133 trillion, according to a new report from data tracker eVestment. Altogether, investors have pumped $64.3 billion into hedge funds in the first seven months of the year.
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Shares of Etsy fell about 5.5 percent on Friday and are now down about 22 percent in the past four days alone, a big blow to Tiger Global Management.
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Arch Coal was once again the big winner on an ugly day, gaining about 15 percent. The stock is still down more than 70 percent in the past year or so. The company’s largest shareholders include D.E. Shaw & Co., Millennium Management and Renaissance Technologies.
