A little over a year since the West Texas Intermediate slumped into negative price territory for the first time ever in the aftermath of Covid-19 outbreak, the US oil benchmark soared to around USD75 per barrel on Thursday, a level not seen since 2018. Energy-focused hedge funds are capitalising on the commodity’s continued upsurge, with sector-focused strategies notching up double-digit returns entering 2021’s halfway point.
Elsewhere, event driven hedge funds are successfully seizing on the growing momentum in M&A and other corporate activity this year. New stats published by bfinance this week showed merger arbitrage, special situations and activist strategies have generated their best first-quarter performance in more than two decades.
One well-known activist hedge fund, CIAM, is continuing to campaign against what it sees as “significant corporate governance deficiencies” at French reinsurance firm SCOR SE. The Paris- and London-based manager said the company’s board of directors can “no longer ignore” shareholder discontent over governance practices, after a vote at SCOR’s AGM this week registered sizeable opposition to proposed remuneration policies.
Credere Capital, the convertible arbitrage-focused manager led by industry veteran Oliver Dobbs, is preparing to unveil a higher-volatility, higher-return version of its Trium Credere flagship in the third quarter. The new roll-out aims to capitalise on growing allocator demand for relative value arbitrage strategies, which has been boosted both by rising issuance volumes in convertible bonds and other debt/equity hybrid securities and comparative underperformance of market neutral strategies in risk-off markets.
Meanwhile, new HFR data shows more hedge funds were launched during Q1 than at any other time since the end of 2017, with launches outweighing liquidations for the third consecutive quarter.
With Q1 liquidation rates on track to be “well below” those seen in the past two years, and 2021 launches expected to be well up on 2020, it’s yet another sign of the underlying strength of the global hedge fund industry, whose collective performance on average stands at almost 10 per cent YTD.
Hugh Leask
Editor, Hedgeweek