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The 20 percent club: hedge fund stars of an industry rebound

From Reuters - November 10, 2017

NEW YORK (Reuters) - A group of prominent hedge funds have roared back with market-trouncing returns in 2017, helping the industry score its best performance in at least four years in a surprise rebound for an often maligned pocket of Wall Street.

An elite club of managers rode bull markets and increased dispersion between securities to score profits of at least 20 percent through the end of October, a dramatic improvement from last year for investors such as Larry Robbins, Philippe Laffont and Chase Coleman, people familiar with individual funds performance said.

One of the largest returns came from Charlottesville-based investor Jaffray Woodriff, who used short-term stock bets to score a 68.3 percent gain in a key fund of his $4 billion Quantitative Investment Management.

By comparison, the S&P 500 Index was up 15 percent, more than double the benchmark HFRI hedge fund index, which was up 7.23 percent through October, its best annual return since at least 2013.

"We have been seeing significantly improved performance," Darren Wolf, head of hedge fund solutions for the Americas at Aberdeen Asset Management, said.

The last few years have been littered with hedge fund managers who charged steep fees and often promised heady returns only to lose money for investors or close shop entirely. A roaring stock market and the rise of low-cost investment tools, such as index funds, have also hit the industry.

Still, the mega winners this year offer some hope for investors and managers who believe the industry can produce alpha, or returns above the markets beta.

The main fund managed by Robbins $11.7 billion Glenview Capital Management LLC is up 21 percent so far this year, thanks to positions in healthcare technology provider IQVIA Holdings Inc, health insurer Anthem Inc and chemical manufacturer FMC Corp, according to a public disclosure of top stock holdings and a person familiar with the returns. Like others, the person requested anonymity to discuss private information about the fund.

Robbins, a New York-based billionaire, lost money for investors in both 2015 and 2016, according to a report by HSBC Alternative Investment Group.

Coleman and Laffont relied on technology companies to drive outsized gains.

The main fund managed by Colemans $20 billion Tiger Global Management LLC gained 34.5 percent through October, due partly to investments in Chinese internet companies Alibaba Group Holding Ltd and JD.com Inc, a second person familiar with his performance said.

UNDER PRESSURE

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