ML-Implode News - Loeb's Third Point Says Hedge Funds in 'Catastrophic' Period

Third Point, founded by Dan Loeb, said hedge funds are in the first stage of a "washout" after "catastrophic" performance this year. The $2.9 trillion hedge fund industry had the worst start to a year in returns and outflows in at least seven years. Alan Howard's Brevan Howard Asset Management and Paul Tudor Jones' Tudor Investment Corp. are among the firms that clients are pulling billions of dollars from, while managers including Bill Ackman and John Paulson have posted steep losses.
Hedge funds lost 1.9 percent in the first quarter, according to Hedge Fund Research's global index, the poorest performance since 2008. The industry had net outflows of $16.6 billion in the last two quarters, the most since 2009, according to HFR. In 2015, 979 funds closed, more than any year since 2009, according to the research firm.
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"Further exacerbating the carnage was a huge asset rotation into market neutral strategies in late the fourth quarter," Third Point said. "Unfortunately, many managers lost sight of the fact that low net does not mean low risk and so, when positioning reversed, market neutral became a hedge fund killing field."

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Loeb's Third Point Says Hedge Funds in 'Catastrophic' Period