Tuesday Feb. 23, 2016 www.bloombergbriefs.com INTRODUCTION Feb. 23, 2016 Bloomberg Brief Hedge Funds 2 INTRODUCTION Bloomberg Brief: HEDGE FUNDS BY MELISSA KARSH AND NATHANIEL E. BAKER Bloomberg Brief Managing Editor Hedge funds attracted a net $44 billion in assets globally last year, the smallest Jennifer Rossa • [email protected] amount since 2012, according to data compiled by Hedge Fund Research Inc. That reflects a volatile year, when unanticipated economic events rattled markets and led to Executive Editor, Finance declines and losses for many funds. Others were hurt by crowded and sometimes Christine Harper • [email protected] concentrated trades and poorly timed bets on energy as oil prices continued to fall. Still, there were bright spots: many long-term holdings paid off and some managers Hedge Fund Brief Editors made well-timed Melissa Karsh • [email protected] buys, while others Net Flows Into Hedge Funds by Assets Nathaniel E. Baker • [email protected] combed through Anne Riley • [email protected] small-caps or illiquid securities to Bloomberg News Editors find opportunities Christian Baumgaertel • for arbitrage. Even [email protected] some funds that Vincent Bielski • [email protected] didn't perform particularly well Reporters were diversified or Katherine Burton • [email protected] hedged enough to Simone Foxman • [email protected] protect their Bei Hu • [email protected] investors from the Saijel Kishan • [email protected] worst of the Nishant Kumar • [email protected] "downside," in a Hema Parmar • [email protected] year that had Katia Porzecanski • [email protected] Larger hedge funds remained more successful at attracting money last plenty of it. year, according to Hedge Fund Research Inc. Will Wainewright • [email protected] This special Suzy Waite • [email protected] report on 2015 Hedge Fund Rankings looks at two groups — the top 50 best performers with $1 billion or more in assets and the top 25 best-performing hedge funds with $250 Contributing Data Editors million to $1 billion in assets. The rankings are based on data compiled by Bloomberg's Anibal Arrascue • [email protected] Anibal Arrascue and Laurie Meisler and information supplied by hedge-fund firms, Laurie Meisler • [email protected] databases and investors. In analyzing the returns, a few key themes emerged: Advertising Asia hedge funds as a group performed better than their competitors in Europe and Adrienne Bills North America in what was the most volatile year for Chinese equities in a decade. [email protected] +1-212-617-6073 It was a year for stock pickers, with half of the top 50 funds focused on equity markets. Sector-specific strategies were some of the biggest winners, with Perceptive Reprints & Permissions Advisors's life sciences fund taking the top spot on the list of hedge funds with more Lori Husted than $1 billion in assets. The firm's CEO Joseph Edelman discussed his strategy in an [email protected] exclusive conversation with Bloomberg. +1-717-505-9701 x2204 The sector-specific theme was not limited to the U.S., or even to equity markets, as Ping Capital Management's macro strategy, which topped the medium-sized funds list, successfully bet on Argentina. Multimanager firms featured prominently on the top 50 list. Perhaps as a result, they are in expansion mode and ramping up hiring in 2016. Many managers who once called Steven A. Cohen their boss performed well last year, led by Gabriel Plotkin, who grabbed the No. 2 spot on the top 50 ranking. It may be too late for some, but the lessons learned feature in this edition imparts some wisdom from this difficult year while the closures pages analyze the carnage with Interested in learning more about the Bloomberg a non-exhaustive list of the funds that shut their doors or returned outside capital during terminal? Request a free demo here. 2015. This newsletter and its contents may not be forwarded or redistributed without the prior If you want more content like this, take a free trial to one of Bloomberg Brief's weekly newsletters: Hedge consent of Bloomberg. Please contact our Funds, Hedge Funds Europe and Hedge Funds Asia. Terminal users can subscribe for free at BRIEF reprints and permissions group listed above for <GO> on the Bloomberg Professional Service. To access Bloomberg's Hedge Fund Database more information. Homepage, type HFND on your Bloomberg Terminal. Not a terminal user? Get introduced. © 2016 Bloomberg LP. All rights reserved. RANKINGS Feb. 23, 2016 Bloomberg Brief Hedge Funds 3 RANKINGS 2015's Top-Performing Funds With $1 Billion or More in Assets Bloomberg's rankings of the top-performing hedge funds are based on funds' net returns for 2015. Because hedge-fund returns can be difficult to obtain, our lists are not all-inclusive. In addition, some of the numbers were difficult to verify. Unless the information came from Bloomberg data or the hedge-fund firm itself, we tried to verify it with other sources, including investors and other fund databases. All returns are for full-year 2015; fund assets are the latest available. Onshore and offshore assets were combined for a number of funds, while figures for other funds were only for the larger or better-performing class of the fund. Continued on next page… Feb. 23, 2016 Bloomberg Brief Hedge Funds 4 RANKINGS… Continued from previous page... ASIA BY BEI HU Feb. 23, 2016 Bloomberg Brief Hedge Funds 5 ASIA BY BEI HU Asia Strategies Top Rankings as Jiang Pounces in Panicky Market China's market tumult has been Four Asia Funds in Top 10 Best Performers List With $1B unnerving investors around the globe, but when volatility flares, George Jiang, the founder of Shanghai-based hedge fund Greenwoods Asset Management, smells opportunity. In 2015, the most tumultuous year in Chinese equities in a decade, Jiang’s Golden China Fund returned almost 22 percent. It joins three other Asia-based funds near the top of Bloomberg’s ranking of the 50 best-performing hedge funds worldwide with assets of $1 billion or more last year. The strong performance by Segantii Capital Management, Sylebra Capital Management, Greenwoods and Tybourne Capital Management (HK) shows that the industry has matured in the volatility last year. The Shanghai can weather the business cycle. "We had Asia, where a number of billion-dollar benchmark index jumped almost 60 identified a few recently, such as some firms started after the 2008 financial percent in the first five-and-a-half months companies in the education business and crisis. These managers are being tested of last year before plunging as much as health-care sector. Also we added to again this year as Chinese stocks extend 43 percent over the next three months. some core holdings" after thorough due their slump and the central bank steps up After Golden China lost more than 8 diligence "and believe they are efforts to stimulate the economy and percent in both July and August, at the fundamentally strong.” control the devaluation of the yuan. height of the China stock selloff, Jiang Greenwoods managers told investors In January, Golden China lost 11 added to holdings of Chinese Internet in its November newsletters that Chinese percent, according to data compiled by companies such as Sina Corp. and companies’ valuations will rebound from Bloomberg, as the Shanghai Composite consumer firms like Kweichow Moutai distressed levels seen during the market Index plunged almost 23 percent and Co. that he expects to grow in different panic because of government easing to gauges of Hong Kong- and U.S.-listed stages of the business cycle. During the stimulate an economy. The country’s Chinese stocks also had double-digit year, the fund also sold holdings that had economy is growing at the slowest pace declines. It’s the kind of volatility that become expensive. in 25 years. Jiang has navigated many times before. Helped by the fourth-quarter rebound This isn’t Jiang’s first rodeo. Golden "We watched the market closely when of the American depository receipts of China, whose almost 28 percent it tumbled but we were never panicky,” Chinese Internet companies, the fund annualized return from inception to said Jiang, who has a master’s degree in booked double-digit returns during the December 2015 was more than twice international finance from the Graduate year from Ctrip.com International Ltd., that of the MSCI China Index, recorded School of the People’s Bank of China, Sina and Youku Tudou Inc., said Zeng, two annual losses out of 11 full years of the country’s central bank. “The stock the partner. Shares of those companies trading. In 2008, the fund declined almost market tends to overshoot on either the jumped as earnings beat estimates and 56 percent amid the global credit crisis. upside or downside from time to time. mergers among technology companies Investors fled, cutting its assets from an And we want to take advantage of boosted investor sentiment. October 2007 high of $810 million to one- mistakes in the market when that occurs.” The fund also benefited from consumer tenth of that size by February 2009. While most international institutions companies with yuan- and foreign Today, Golden China investors are that Greenwoods has met with are currency-denominated shares listed in more willing to ride out short-term price cautious or pessimistic about China, an China, such as jewelry maker and retailer swings in the Chinese market, Zeng said. endowment in the U.S. and several Lao Feng Xiang Co. and spirits producer "When investors heard that we added to family offices were planning to put more Kweichow Moutai, Zeng said. Golden high-conviction stocks after they fell a lot, capital into the firm’s funds in February, China gained 14 percent in the final and the rationale, most of them said Joseph Zeng, a Hong Kong-based quarter of the year.