Tuesday, January 31, 2023

Event-driven leads industry performance in October


  • Headline ED strategy up 3.7% last month; down 4.3% for year
  • Twitter takeover spawns big merger arb gains
  • Neuberger Berman starts new Ucits product

Event-driven hedge funds outperformed in October, boosted by an equity rally and Elon Musk’s Twitter deal closing.

The strategy beat other headline strategies with a 3.7% gain, according to Hedge Fund Research, but remains down 4.3% for the year.

The HFRI Fund Weighted Composite Index made 2% in October but remains down 4.5% for the year.

Several hedge funds profited from Musk’s takeover of Twitter, the largest leveraged buyout in tech history and grounds for a long-running merger arb trade which eventually paid off.

Man Group said event-driven “performance in October was helped by several large deals that closed, most notably Twitter, which ultimately surprised as there was no price cut.”

London-based Kite Lake was among the funds to gain from the Twitter deal. Its $1.1bn flagship is up 13.3% this year through 4 November and has plans to begin fundraising to reach $1.5bn, where it will hard-close.

Privilege Amber Event Europe made 0.7% in the month to 28 October, but remains down 1.9% year-to-date. Other performance numbers for last month will come through this week.

Despite weak returns this year, some see opportunities in event-driven rising. Pierre di Maria, head of event-driven at Cheyne Capital, recently said he expected the consistently strong dollar to produce more dealmaking around UK companies.

Chicago-based Neuberger Berman has just announced the launch of a new Ucits funds looking to profit from corporate events, led by managing director Joe Rotter, who previously headed event-driven at Citadel.

Two-thirds of all hedge funds made money last month, according to HFR. “October marks an important reversal for Directional strategies,” said Ken Heinz, president of the data provider.

“Funds opportunistically navigated both political uncertainties, as well as inflation and interest rate driven volatility, with gains distributed across the universe of both directional and uncorrelated strategies, with leadership from fundamental Value, shareholder activist, distressed and special situations exposures.”

Now read: Hedge fund October performance: CTAs flat as equities rise