Sehr Gut! Investor's Germany, Japan bets pay off

Eton Park Capital Management's international bets are paying off.

Investments in European and Asian stocks—including Porsche and options on Japanese equities—helped power Eton's main hedge fund to a 7.1 percent net-of-fees gain over the first quarter, according to a private letter to investors.

"We believe that some of the broader based misvaluations are currently outside the U.S., particularly in Japan and China and to a lesser extent in Europe," the letter said.

Eton Park, which invests around the world using all types of securities as a "multistrategy" hedge fund, runs about $9 billion. The New York-based firm is led by former Goldman Sachs partner Eric Mindich.

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Some of the largest gains came from positions in the stock of German carmaker Volkswagen and Porsche, one of its brands. The companies gained 34 percent and 36 percent, respectively, over the quarter.

"Volkswagen's key automotive end markets have continued to perform well, with improving demand in Europe, strong demand in the U.S. and solid demand but slower growth in China," the letter explained.

Other big European winners included shorting the euro versus the dollar—a popular hedge fund trade—and bets on European stocks gaining in value. The German DAX stock index, for example, climbed 22 percent over the first quarter as the European Central Bank launched a fresh economic stimulus program.

The fund also gained on Japanese and Chinese stocks, both of which were propelled by government stimulus and structural reform efforts.

A spokesman for Eton Park declined to comment.

The first-quarter gains come after the fund rose 13 percent in 2012, 22 percent in 2013 and 6.4 percent in 2014, according to a person familiar with the performance. That compares to returns of the Absolute Return Multi-Strategy Index, which tracks similar hedge funds, of 8.6 percent in 2012, 10.6 percent in 2013 and 5.3 percent in 2014.

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Founded in 2004, Eton Park's 10-year annualized performance is about 10 percent, according to the person, better than 7.78 percent for the AR Index over the same period. While Eton Park has done well in recent years, its assets are still down from $14 billion in 2011, a year when the fund ultimately fell more than 11 percent.

Returns for some older Eton Park investors are slightly lower because of legacy "special" investments that have been segregated from the main portfolio. That so-called side pocket of bets represents less than $700 million in assets.