Thursday, October 1, 2009

Activist Investors Bounce Back

By David Walker

Activist hedge fund investors, whose strategy was one of the worst hit in the financial crisis, have achieved a sharp turn round in performance in recent months, and are now heading for their best year on record.

Although some activists have continued to lose money, the average fund returned 29.23% in the eight months to the end of August, according to the latest figures for the activist hedge fund investable index introduced this year by data provider Hedge Fund Research. Among those showing strong returns, U.S. manager Greenlight Capital was up 21% for the first eight months while U.S. rival Third Point was up 14% in the first seven months, according to investors.

The returns for this period are activists’ best since at least 2005, the earliest date for which the index provides performance data. They outpaced equity markets and all but one other hedge fund strategy.

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As of market close on September 30, 2009 Hedge Fund Solutions' portfolio of companies highlighted in their Catalyst Investment Research(TM) posted an 11.4% increase in value for the four companies that have yet to realize a "catalyst" and an average 60.0% increase in value for the companies where a catalyst has been realized (catalysts have been achieved within an average 37 days).

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