Hedge Funds Catch A Serious Case Of Alpha

It may be hard to remember this after a decade of badly trailing the broader markets, but the ostensible purpose of a hedge fund—and the willingness of investors to pay their fees—is to produce alpha, which is to say outperformance of said market. Its absence explains the proliferation of premature obituaries, which did not account for investors’ apparently insatiable desire to pay far too much for far, far too little, and for the existential question, “What, exactly, is the point of these things?”

Well, we now have an answer. It’s not a particularly convincing one, or one with a great deal of application in a forward-looking sort of way, but all the same: Alpha apparently happens now only when a mysterious virus begins to make a great many people sick and the markets react accordingly.

“Finally, after many years, you might look at this month and say that hedge funds are doing what they are supposed to do,” said Craig Bergstrom, chief investment officer at the $7.8 billion Corbin Capital Partners, which invests in hedge funds.

Who did their job last month? Well, the odious Crispin Odey, for one. Brevan Howard managed a positive return, as well, as did Izzy Englander, Marshall Wace, Horseman Capital and a certain someone who doesn’t have to worry about being distracted from his work by a bad outing from Noah Syndergaard anymore.

Steve Cohen’s Point72 Asset Management gained almost 1% in February, amid a market rout that saw the S&P 500 Index tumble, according to people with knowledge the matter.

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