Guess which hedge funds beat the roaring S&P 500 this year?
A roaring S&P 500 Index, up close to 30 percent in 2013, left many hedge funds in the dust. But a number of players managed to top the index with smart stock-picking or distressed investing nonetheless.
Driven by large, aggressive positions in a handful of hospitals, health care and consumer services names, the Glenview Capital Opportunity Fund, run by money manager Larry Robbins, churned out returns of 97 percent through late Monday, says someone familiar with the matter.
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Robbins' main fund, which has tighter position limits on individual holdings, returned more than 43 percent. Both were helped by sizable positions in names like the pharmaceutical company McKesson, and the scientific technology and products companies Thermo Fisher and Life Technologies, as well as stocks like the insurer American International Group and Xerox.
John Paulson's Paulson Recovery Fund, after a mixed period in which his company's assets under management dropped precipitously, is ending the year up roughly 60 percent, according to an investor. Those returns are thanks greatly to the financial stocks in its portfolio, names like Blackstone, Apollo, and CNO Financial, which make up three-quarters of the fund's holdings, but also to wins in the mortgage sector, like Genworth Financial and Radian Group, says someone familiar with the results, adding that the November IPO of Extended Stay hotels was also a boon.
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Third Point's Ultra fund, the levered, or riskier, sister of Dan Loeb's flagship fund, is up about 39 percent as of late December, said two people familiar with the matter, buoyed by some of Loeb's classic event-driven investments, liked the cable provider Virgin Media, which he bought prior to its takeover by Liberty Global. Loeb also scored with some Japanese holdings like SoftBank and Sony Corp.—even though Sony management dismissed some of his suggested corporate changes—as well as names like Yahoo, and investments in structured credit.
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Other major winners in 2013's markets, who handily beat the average hedge fund return of just north of 8 percent through late November, according to the firm Hedge Fund Research, include Nelson Peltz, David Tepper and Chris Pucillo, who runs Solus Alternative Asset. Management.
Through late December, Peltz's Trian main fund was up roughly 40 percent, according to one investor, Tepper's Palomino Fund was up a reported 38 percent through late November. And on Tuesday, Solus' main fund, Sola, was up roughly 31 percent, said someone familiar with the matter.
—By CNBC's Kate Kelly. Follow her on Twitter