These big hedge funds got crushed in January

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Hedge funds & the Japanese trade

Most hedge funds that bet on big economic trends lost money in January, hurt by reversing stock markets and wrong-way currency bets.

Some of the hedge fund industry's most prominent names were among the losers for the month.

A prime example was Caxton Associates's Caxton Global Investment fund, which fell 1.2 percent through Jan. 31. Andrew Law's $7.7 billion New York based firm was hurt—like many others—by being long Japanese stocks and short the yen, according to a person familiar with the positioning. The Japanese Nikkei 225 fell 8.45 percent in January after steep gains in 2013. The yen gained nearly 3 percent in January after sharp declines last year.

Caxton was able to stem further losses by cutting risk as the trades went awry and benefited from shorts on the Canadian dollar, according to the person. A spokeswoman for Caxton declined to comment.