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Apple, Herbalife and JCPenney provided plenty of agita for hedge-fund stars in the first three months of the year.
Even the biggest names in the business couldn’t break the hedge-fund industry’s six-year streak of underperforming the broader market during the first quarter.
Since 2008, hedge funds have failed to best the Standard & Poor’s 500 during the first quarter, according to Bank of America Merrill Lynch, which estimated a 3.26 percent gain for the group so far this year.
While the activist investors who ply their trade in the media — including Dan Loeb, Bill Ackman and David Einhorn — far outperformed their peers, they still came in below the 10 percent gain of the S&P 500.
Loeb’s $11.7 billion Third Point was the best of the bunch, with a 9 percent return for the quarter. Loeb trimmed his high-profile stake in Yahoo! in February, but the Internet company was his top winner in March.
About 5 percent of Loeb’s gain came from his stake in controversial nutritional supplements maker Herbalife. Loeb sold before Herbalife started its 7 percent tumble in March.
No hedgie endured the media’s harsh glare more than Ackman, whose $12.39 billion Pershing Square managed a 6 percent gain despite losses in JCPenney and his $1 billion short on Herbalife, which ended the quarter up 14 percent. Troubled Penney was Ackman’s worst performer, down 23 percent.
Ackman’s gains were propelled by his less controversial holdings, including Canadian Pacific Railway, up 28 percent, and Procter & Gamble, which gained 13.5 percent.
Einhorn’s $8.8 billion Greenlight Capital gained 6.1 percent for the quarter. His largest holding — Apple — fell 17 percent.
Einhorn dropped a lawsuit against Apple on March 1 after the company withdrew a controversial proposal to allow shareholders to limit the issuance of preferred shares. Einhorn had opposed the proposal, and a judge ruled in his favor.
Apple gained 0.3 percent in March.