Activists lead hedge fund bounce-back in February

Bill Ackman
Adam Jeffery | CNBC
Bill Ackman

Hedge funds are back in the black for 2015, and some familiar strategies are leading the way.

Following losses in January, the average fund gained 1.93 percent net of fees in February, bringing year to date returns to 1.56 percent, according to a new report from industry data tracker eVestment.

The top-performing strategy last month was corporate activism, a style of investing that has surged in popularity and was generally boosted by rising stocks over the month.

The average activist investor gained 5.37 percent in February, bouncing back from an average loss of 3.44 percent in January, according to eVestment. That brings the year's returns to 1.55 percent following a 4.83 percent gain in 2014. It was the best performance for the industry since February 2014.

Activist fund manager Bill Ackman was a case in point: His Pershing Square Holdings fund gained 6.2 percent net of fees in February, according to a public filing. Portfolio companies to gain over the month included Allergan, Zoetis and Platform Specialty Products. Pershing Square Capital Management oversees $19.9 billion overall.

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A much smaller activist manager up big was Maglan Capital, a $75 million firm led by Steven Azarbad and David Tawil. The fund surged 20.84 percent net of fees in February, driven mostly by a stake in FairPoint Communications, which reached an agreement with striking union members. Maglan is up 9.5 percent for the year, according to investor documents.

A third to gain was Mick McGuire's $3 billion Marcato Capital Management. Its main fund rose 8.8 percent in February, bringing year's returns to 2.38 percent, according to HSBC's Alternative Investment Group. Holdings to gain included Bank of New York Mellon and Goodyear Tire & Rubber.

Hedge funds that bet on managed futures—contracts on the future price of securities such as stocks, currencies and commodities—posted some of the lowest returns for the month, an average gain of just 0.12 percent when virtually all strategies made money.

Such so-called systematic funds remain the strongest performing strategy of 2015 at 2.83 percent, following on their top-ranked 6.83 percent average gain in 2014.

Top-performing large futures funds last month included Renaissance Institutional Futures Fund (up 6.89 percent for February and 7.07 percent for 2015); Two Sigma Compass Cayman Fund (up 4 percent for February and down 4.74 percent for the year); and the Winton Futures Fund (up 0.21 percent last month and 2.66 percent for the year), according to the HSBC report and performance obtained by

Winton Capital manages $30.3 billion overall; Two Sigma runs $24 billion in total assets.

Performance drivers for those funds, which usually bet on dozens or hundreds of markets at once using computer algorithms, were unavailable. According to eVestment, the more tepid performance in the strategy came from the end of winning trades against the price of oil and declining interest rates. The U.S. dollar also continued to appreciate versus other currencies, a common position for funds, but at a slower rate.

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