Key Takeaways
- • Glenview Capital Partners down 3.45% through June 2018 despite healthcare sector gains of 10.3%; fund manager Larry Robbins' divergence losses in chemicals and consumer goods offset strength in core HCA Healthcare ($1B+) and Shire ($897M) positions.
- • Hedge fund industry broadly underperforming: Asset class returned only 0.79% through June 2018, lagging the S&P 500 while multiple flagship funds posted losses, including Balyasny Asset Management's Atlas Global down nearly 4%, Ascend Capital, and Owl Creek Asset Management.
- • Greenlight Capital's David Einhorn posted worst-in-class losses of more than 18% through June 2018, significantly outpacing peer losses and highlighting sector-wide performance challenges.
- • Glenview's non-healthcare bets eroded returns: DowDupont fell 7.44%, FMC declined 5.76%, and Newell Brands dropped 16.54%, offsetting healthcare holdings that generated double-digit gains in 2018 year-to-date.
- • Sharp reversal from 2017 strength: Glenview Capital Partners delivered 23.38% in 2017 but has underperformed 2018, signaling increased market volatility and sector concentration risk in flagship positions.
Summary
Midway through 2018, a cohort of prominent hedge funds faced significant headwinds, with several marquee names trading in negative territory despite a year when many expected recovery from 2017's volatility. According to HSBC's weekly hedge fund performance scoreboard and Hedge Fund Research data, the hedge fund industry as a whole returned just 0.79% through June, trailing both the broader market and historical expectations for alternative investment returns.
Larry Robbins' Glenview Capital Partners emerged as a notable underperformer, declining 3.45% as of June 30 after posting a robust 23.38% gain in 2017. The retreat was particularly striking given Robbins' established expertise in healthcare, a sector that substantially outperformed the broader market by gaining 10.3% during the first half. Glenview's two largest healthcare holdings—a billion-dollar-plus position in HCA Healthcare and an $897 million stake in Shire—both generated positive returns, advancing 16.80% and 8.82% respectively through mid-year.
However, Robbins' allocation into non-healthcare sectors proved costly. DowDupont, Glenview's third-largest position at $829 million, declined 7.44%. Additional drag came from FMC Corporation, a chemicals manufacturer that fell 5.76%, and Newell Brands, maker of Rubbermaid products, which dropped 16.54%—losses that substantially eroded the gains from healthcare core holdings.
Glenview was not alone in struggling. Balyasny Asset Management's Atlas Global Investments fund declined nearly 4% year-to-date, while Ascend Capital and Owl Creek Asset Management also posted losses through the first half. Most notably, David Einhorn's Greenlight Capital flagship fund faced drastic losses exceeding 18%, substantially outpacing peer declines and underscoring volatility across the hedge fund complex. The broader performance malaise reflected both market conditions and individual manager positioning, with hedge funds collectively failing to outpace or even match equity index returns during a period of moderate market gains.
Larry Robbins' Glenview Capital Partners emerged as a notable underperformer, declining 3.45% as of June 30 after posting a robust 23.38% gain in 2017. The retreat was particularly striking given Robbins' established expertise in healthcare, a sector that substantially outperformed the broader market by gaining 10.3% during the first half. Glenview's two largest healthcare holdings—a billion-dollar-plus position in HCA Healthcare and an $897 million stake in Shire—both generated positive returns, advancing 16.80% and 8.82% respectively through mid-year.
However, Robbins' allocation into non-healthcare sectors proved costly. DowDupont, Glenview's third-largest position at $829 million, declined 7.44%. Additional drag came from FMC Corporation, a chemicals manufacturer that fell 5.76%, and Newell Brands, maker of Rubbermaid products, which dropped 16.54%—losses that substantially eroded the gains from healthcare core holdings.
Glenview was not alone in struggling. Balyasny Asset Management's Atlas Global Investments fund declined nearly 4% year-to-date, while Ascend Capital and Owl Creek Asset Management also posted losses through the first half. Most notably, David Einhorn's Greenlight Capital flagship fund faced drastic losses exceeding 18%, substantially outpacing peer declines and underscoring volatility across the hedge fund complex. The broader performance malaise reflected both market conditions and individual manager positioning, with hedge funds collectively failing to outpace or even match equity index returns during a period of moderate market gains.
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