High-Risk Long-Ball Strategy Pays off for Pine River, Tilden Park, Appaloosa and Barnegat

November 5th, 2012
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A handful of hedge funds are winning the game this year by employing the high-risk tactic of swinging for the fences. As reported by the Wall Street Journal, several hedge funds are finding success amidst a sea of underperforming hedge funds by using unconventional, often contrarian and almost always risky strategies.

Some of the strategies are throwbacks to earlier times, such as Pine River Capital Management’s and Tilden Park Capital Management LLP’s bet on subprime mortgages, but this time they’re bullish. Tilden Park Capital Management LLP took a rare, contrarian bet against JP Morgan prior to its massive, $6 billion trading fiasco.

Similarly Appaloosa Management LP, which has traditionally focused on distressed debt to drive huge gains, but this time it’s banking on a housing recovery. Some of the big hitters, such as Barnegat Fund are employing heavy doses of leverage to propel their strategies, warning investors that it may not be a good idea to invest with it. Although the Barnegat Fund has achieved big gains this year, investors have heeded the warning and are avoiding the fund.

Other hedge funds are applying another throwback strategy, stock picking, with relative success. Stock gains in technology, airlines, and European companies have boosted Appaloosa Management’s returns, while Lone Pine Capital LLC has bet heavily on consumer-related stocks, including Apple and Priceline, with huge success. CQS LLP of London is also overachieving this year with year-to-date stock gains of 27% versus the S&P 500 at 14%.
For Detailed Investor Profiles on these Investors, click below:
Appaloosa Management
Barnegat Fund Management
CQS Management Limited
Lone Pine Capital
Related People: Bob Treue; David Craver; David Tepper; Grant Thompson; Jack Walton; Kerry Tyler; Mala Gaonkar; Marco Tablada; Michael Hintze; Steve Mandel; Steve Mandel
Related Entities: Barnegat Fund; CQS (UK) LLP; CQS Convertible and Quantitative Strategies Fund; CQS Credit Long/Short Fund; CQS Investment Management Limited; Lone Balsam LP; Lone Cascade; Lone Cypress Funds; Lone Dragon Pine; Lone Juniper; Lone Pine Capital (LPC); Lone Pine Sierra LP; Lone Sequoia LP; Lone Spruce LP; Palomino Funds.; The Barnegat Company; Tiger Management*
Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News; Hedge Fund Spotlight Reports

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