Several hedge funds are affected by losses caused by recent market turmoil.
Traders say the pain that has plagued top hedge funds Melvin Capital Management and Maplelane Capital in recent days is spreading, as an increasing number of shares with significant short-term interest rates and as funds deal with losses they withdraw their stock exchange exposure on both the long and short sides of their portfolios.
This means that funds are affected even by previously profitable bets on companies, as stock prices fall.
Candlestick Capital Management, a $ 3 billion hedge fund in Greenwich, Conn. familiar with the background. It increased by 26% in 2020, its first year.
D1 Capital Partners, a successful fund in recent years founded by former Viking Global investment chief Dan Sundheim, fell about 20% for the year through Wednesday. Its substantial portfolio of investments in private companies amortized the fund from a higher loss. D1 raised $ 20 billion earlier this year.
Steven A. Cohen’s Point72 asset management, which, along with Citadel and its partners, injected Melvin with $ 2.5 billion in emergency funding on Monday, fell about 10 percent year-to-date this week and suffered losses on Tuesday and Wednesday, said well-known people in this regard. .
Bloomberg News was the first to report the performance of D1 Capital and Point72.
Some funds that have suffered severe losses are looking for cash flows to stabilize their businesses.
Maplelane, which started the year with about $ 3.5 billion and fell about 30 percent for the year through Tuesday, suffered additional losses that dropped it about 45 percent for the year through Wednesday, people familiar with the fund said. . One person said Wednesday’s losses resulted from the deterioration or reduction of its exposure to the stock market. This included reducing the size of the position and leaving the name to limit losses.
Maplelane is a low profile hedge fund that has rarely been traded to investors in the past. But he talked about raising $ 300 million to $ 500 million with potential customers, people familiar with the fund said.
The losses came during a period of frantic trading, with shares of companies such as GameStop Body.
and AMC Entertainment Holdings Inc.
pulling wildly above. Individual investors claimed victory for violent movements not covered by the basic foundations of companies. Rising prices led rising investors to buy back shares they had sold short to reduce their losses, further pushing up larger stocks.
Write to Juliet Chung at juliet.chung@wsj.com
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