October was a rough month for much of the hedge fund crowd, where many players underperformed the U.S. stock market and wound up with big losses.
Macro funds—the global players who trade stocks, currencies, credit and commodities—continued the struggle they've experienced most of the year, with funds like Caxton Global and Fortress Macro down nearly 8 percent and 7 percent for the year through October, respectively.
Both funds were in the red at the start of the month, but October's volatility appeared to worsen their performances, as the U.S. stock market plunged, then bounced back, and weaknesses in Europe and slowing growth in China persisted.
Some investors, though, weathered the storm.
Fortress—the roughly $1.6 billion macro fund run by Mike Novogratz—was helped by an unexpected round of additional quantitative easing stimulus announced by the Bank of Japan overnight on Thursday, a move that triggered a monster rally in the TOPIX index, a benchmark he recommended buying over the summer. (An investor in the fund said Novogratz has maintained his bullish outlook since.)
Also helping Fortress were its bets on the Brazilian market, where Novogratz had predicted an election loss by President Dilma Rousseff and a resultant rally in the country's assets.
Although Rousseff ultimately won the election in October by a slim margin, Fortress' Brazil book finished the month up, said the investor, who didn't provide additional details. Overall, the Fortress fund gained an additional 3 percent during October's final week, this person said, helping to limit a downward slide for the month and ending October down 1.8 percent.
In the event-driven arena, a number of funds weathered trouble after a much-anticipated combination between the pharmaceutical companies Shire and AbbVie appeared to be crumbling late on Oct. 14—news that helped set off a wildly volatile trading session the next morning in which many funds dumped out of long positions.
Dan Loeb, whose Third Point funds have been some of the best performers of recent years, gave back 1.3 percent for October, according to an investor, leaving its flagship up 4.6 percent for the year to date, according to an investor note.
Loeb, whose portfolio can be hard to gauge because he invests in a variety of different asset classes rather than just stocks, saw pain in names like Anadarko and Masco that were offset by double-digit rallies in stocks like Amgen and Alibaba.
Pershing Square, meanwhile, managed to turn around what had amounted to a 4 percent backslide by Oct. 14, according to public filings, ending the month flat.
As a result, a leading year-to-date performance of more than 33 percent returns was unharmed by the month's swings, and the fund's losses appeared limited to just a handful of investments, including shares of Howard Hughes, a company that owns, manages and develops commercial, residential and mixed-use real estate throughout the U.S., and a short position in Herbalife, which rallied.