Hedge fund managers focusing on mergers and acquisitions have outperformed those using other strategies, achieving a 7.7% return in the first five months of 2024, according to a report by Reuters citing a Goldman Sachs client note. Although Goldman Sachs did not provide a comparison to the previous year, Barclays' prime brokerage reported that similar funds had a negative return of 0.8% from January to May 2023, as high interest rates stifled M&A activities. This year, with declining interest rates and a stabilising economic environment, confidence in corporate deal-making has surged. However, global M&A activity has not yet reached the record levels seen in 2021. According to LSEG data, worldwide M&A was valued at $1.3tn during the first five months of 2024, marking a 23% increase compared to the same period in 2023 but still below the $1.8tn recorded from January to May 2022. The data also shows that US-targeted M&A accounts for 56% of global M&A activity this year, the highest year-to-date share since 1998. Notable deals include Capital One’s $35.3bn acquisition bid for Discover Financial Services in February and ConocoPhillips’ $22.5bn offer for Marathon Oil last month. Overall, hedge funds averaged around a 7% return through the end of May, according to Goldman Sachs. Stock trading hedge funds contributed significantly, with a 7.4% return, boosting the overall average for the group. In contrast, hedge funds that bet on the relative price movements of two assets showed the least strong performance, returning about 5% for the year.
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