Merger Arbitrage Performance

Hedge Funds Return to Merger Arbitrage

Hedge fund merger arbitrage activity is picking up after a dry spell. Hedge funds focused on merger arbitrage gained 8%, that is below the average hedge fund gains but an improvement still. As executives are able to complete deals more confidently, arbitrage traders are expected to make more significant gains.

Times are good for arbitragers because there is less competition in the merger game. Proprietary trading desks of many brokerage firms have been shrunk or eliminated, and some multistrategy hedge funds have switched from merger investing. That is why the spread between an acquisition target’s share price and a deal price has expanded.

Today, target companies typically trade about 12% below an offer price. That is down from about 15% earlier this year, but higher than the 10% or so for most of this decade.

In past years, acquisitions were sometimes announced by parties still hoping to secure sufficient financing. Sometimes that wouldn’t materialize. Now, only those with pretty secure financing are launching offers. And fewer deals are being undertaken by private-equity firms, which have proved more likely than strategic buyers to get cold feet and walk away from a deal. Source

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Hedge Funds Strategy Performance

Hedge Funds Strategies Performance This Year

Hedge funds use many different strategies to achieve returns and some hedge funds seem to be shifting strategies to capitalize on the opportunities in the current market. To learn more about these strategies see this article. Also, you can join Hedge Fund Premium for an exclusive video to be added this quarter highlighting each of these strategies and explaining how they are utilized by hedge fund managers. Here is a list of the most popular strategies and how they have performed in the seven months to end-July.

Strategy: Long-Short Equity

• Well-known hedge funds using this strategy: Odey European, Toscafund

• Performance year-to-date: 11.45 percent

• Performance in 2008: -19.76 percent

Strategy: Managed Futures

• Well-known hedge funds using this strategy: Man Group’s AHL and Winton Futures Fund

• Performance year-to-date: -7.82 percent

• Performance in 2008: 18.33 percent

Strategy: Global Macro

• Well-known hedge funds using the strategy: George Soros’s Quantum fund, Julian Robertson’s Tiger Management, Paul Tudor Jones’s Tudor Investment Corp.

• Performance year-to-date: 5.24 percent

• Performance in 2008: -4.62 percent

Strategy: Event-Driven

• Well-known hedge funds using this strategy: TCI or Atticus

• Performance year-to-date: 9.11 percent

• Performance in 2009: -17.74 percent

Strategy: Fixed Income Arbitrage

• Performance year-to-date: 15.9 percent

• Performance in 2009: -28.82 percent

Strategy: Convertible Arbitrage

• Performance year-to-date: 31.14 percent

• Performance in 2009: -31.59 percent

Strategy: Emerging Markets

• Performance year-to-date: 17.54 percent

• Performance in 2009: -30.41 percent

Strategy: Dedicated Short Bias

• Performance year-to-date: -17.28 percent

• Performance in 2009: 14.87 percent

Strategy: Funds of hedge funds

• Performance year-to-date: 6.95 percent

• Performance in 2008: -21.37

Source

Learn more about Hedge Fund Strategies here.

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Hedge Fund Losses

Hedge Fund Losses in 2008 2009

Here is a video below on hedge fund asset losses and closures. While there is a small set of institutional investors investing in a number of opportunistic hedge funds most are still loosing assets each quarter. Many firms were profitable just 2-3 years ago and now have less assets to manage and little if any performance fees to collect. If you are reading this article over email through our daily hedge fund newsletter please click here to watch the embedded video below.

View over 100 additional hedge fund videos within our Hedge Fund Video Library

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Hedge Fund Strategies

Hedge Fund Strategies Video

Here is a short video I just found on 3 different hedge fund strategies. This hedge fund blog is not offering this video as a form of financial training or advice of any type, but the video should help helpful in understanding hedge fund strategies on a high introductory level. Here is a direct link to the video.

If you have any additional videos on hedge funds or hedge fund strategies that I could add to the directory of videos available on this hedge fund blog please let me know and I would be happy to add them here.

- Richard

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Hedge Fund Strategy

Hedge Funds Strategy Guide

The 10-15,000 hedge funds now being managed throughout the world use between 200-400 different hedge fund strategies. How can you keep these all straight? The short answer is you can’t, but I have started compilining a list of hedge fund strategy definitions here below. Let me know if you are looking for something and can’t find it here.

Hedge Fund Strategy Explanations

• Emerging Markets
• Equity Long Short
• Fixed Income Arbitrage Investment Strategy | 1 Page Guide
• 130/30 Hedge Fund Resources
• Global Macro
• Global Macro Hedge Funds
• Multi Strategy Hedge Fund
• Life Settlement Funds
• Sustainable Investing
• Event Driven Hedge Funds
• Green Hedge Funds
• Art Investment Strategy
• African Hedge Funds
• 130/30 Hedge Funds See Rapid Growth
• Top 5 Hedge Fund Strategies
• Hedge Fund Investment Strategies
• Litigation Funding Hedge Fund Strategy
• Short Selling
• Emerging Markets Hedge Funds
• Risk Arbitrage Hedge Fund Strategy
• Hedge Fund Litigation Funding List
• Warrant Arbitrage
• Arbitrage Investment Strategy

- Richard

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Hedge Fund Strategies

Top 5 Hedge Fund Strategies

There are some hedge fundstrategies with over $50 or $100 billion dollars already being put to work while others are only employed by a small handful of firms. In 5-7 years there will be some new hedge fund strategies that will take hold and propel small emerging hedge fund managers into the world of $1B + hedge funds.

Here is a list of what I see as the top 5 hedge fund strategies that will explode in popularity over the next 5-7 years:

1. 130/30
2. Carbon Credit Trading
3. Socially Responsible & Green Hedge Funds
4. Litigation Funding
5. Intellectual Property (Patents, Domains and Licensing Rights)

Read dozens of more articles like this within my Hedge Fund Strategy Guide.

- Richard

Want to learn about other hedge fund strategies?

Permanent Link: Top 5 Hedge Fund Strategies

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Hedge Fund Investments

Hedge Fund Investments Video

Here is a short video I found on hedge fund investments.

If you can’t view this hedge fund investments video please follow this link: http://www.youtube.com/watch?v=n6m4_UyfLDs

Read dozens of more articles like this within my Hedge Fund Strategy Guide.

- Richard

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Distressed Securities Hedge Fund

Hedge funds that invest in distressed securities buy debt or equity positions into firms filing for reorganization or bankruptancy. Many of these types of funds due extensive fundamental research analyzing the book value, balance sheet, strategic partners, suppliers, and creditors of a company before investing their money. These types of hedge funds usually have relatively low volatility but without exception require someone with deep bench strength and fundamental research experience.

- Richard

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