Hedge Fund Directory

It is being reported that the new hedge fund by Goldman Sachs has faced rough weather in January 2008. From the report on dealbreaker.com,

“The fund is down 6% for January, according to a source familiar with the results. Goldman Sachs Investment Partners fund recently raised $7 billion, according to a report in the Financial Times. The figure was substantially lower than the rumored $10 billion that had been whispered about in December but higher than the target of between $4 billion and $6 billion. Unlike Goldman’s quant driven offerings, GSIP is a stock-picking hedge fund—the first of its kind at Goldman. It is run by former global proprietary trading chief Raanan Agus and former U.S. prop trading head Kenneth Eberts.”

Equities markets everywhere have experienced a lean January so it is not surprising that the fund has taken a hit. But the more disappointing fact is that the fund has lost more then the broad based indices. The DJIA was down 4.7 per cent over the same period, the S&P 500 down 5.92 per cent and the Nasdaq down 10 per cent. This information about the indices is especially relevant in context of this fund as it is equity driven. This decline is not limited to Goldman though and has affected most of the equity driven hedge funds.

Bloomberg.com has some more insight into the numbers. “Hedge-fund managers who concentrate on picking stocks lost an average of 4.1 percent in January, the biggest monthly decline in more than seven years, as global equity markets tumbled, a Hedge Fund Research Inc. report shows.

Goldman Sachs Investment Partners (GSIP), which raised a record $7 billion for a new fund, dropped 6 percent in its first month, according to investors. Timothy Barakett’s Atticus Global Advisors fund, known for betting on only a dozen or so stocks, fell 12.5 percent. It was the worst month for stock hedge funds, which bet on rising and falling stocks, since a 4.3 percent loss in November 2000, when the collapse of technology shares was in full swing, according to a report yesterday by Chicago-based Hedge Fund Research, which tracks industry returns and money flows.”

This decline in the Goldman Sachs fund has insiders questioning on their strategy to go with first ever stock picking fund rather then a quantitative strategy based approach. We think though that it is too early to pass a judgment on the fund. It was only the first month and the markets have been tough so maybe after a few more months, we might see the true performance of this fund. Its too early to bet against Goldman’s capabilities…after all they managed to post record profits through the mortgage turmoil. So there is a strong process to measure risk and absolutely no shortage of capital to take on attractive risks.