Whipsawing markets continue to baffle supposedly savvy hedge fund managers, who are hobbling again this month after registering a short-lived revival in October.
A Bank of America Merrill Lynch hedge fund index fell 1.02 percent through November 23, according to a report released Tuesday by Bank of America Corp
With a week to go, it appears November is shaping up as another mediocre month for the $2 trillion hedge fund industry, in what is shaping up to be a rather forgettable year.
In October, it looked like hedge funds were turning a corner with the Standard & Poor's 500 stock index surging 11 percent. The big jump in stocks gave a boost to many managers whose funds were deep in the red.
But in November things turned decidedly gloomy in the markets, with the European debt crisis once again taking center stage and contagion fears spreading across the globe.
Still, the hedge fund industry can brag in November that the losses for the average fund were less than those registered by the S&P 500, which fell 7.3 percent through November 23.
With November's losses, a number of prominent funds will face a tough challenge to close 2011 in the black.
For instance, Lee Ainslie's Maverick Fund Ltd fell 1.5 percent through November 18, according to data compiled by HSBC's private bank. The fund is down 13.1 percent this year.
James Dinan's York Investment Ltd lost 1.33 percent through November 18. The portfolio's yearly returns are off 7.16 percent. Paul Tudor Jones' Tudor BVI Global Fund also lost ground this month. That fund was down slightly 0.69 percent through November 18, but is still in positive territory year-to-date.
Others have fared better this month.
Boaz Weinstein's Saba Capital Offshore Fund rose 0.78 percent through November 18, according to HSBC. That fund is up 8.9 percent this year. Over the same period, James Simons' Renaissance Institutional Equities LP portfolio only gained 0.14 percent, but the fund is still one of the outstanding performers in 2011, scoring returns of over 30 percent this year.
Hedge fund managers who specialize in going long and short on stocks have been the worst performers through November 23, down 2.45 percent, according to the BofA report. Traditional long/short funds make bets on some stocks rising and other falling.
Commodity Trading Advisors, which place bets on the futures market and in commodities, and Macro funds, which invest in stocks, bonds and currencies based on their reading of global market events, were best positioned to take advantage of November market moves, rising 1.76 percent and 0.99 percent respectively.
(Reporting by Katya Wachtel in New York, edited by Matthew Goldstein and Gerald E. McCormick)