High-Risk Long-Ball Strategy Pays off for Pine River, Tilden Park, Appaloosa and Barnegat
|November 5th, 2012||
|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. |
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%.
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