Dan Sundheim’s D1 Capital Partners, one of the best performing hedge funds last year, lost about 20% this month to Wednesday, making it one of the biggest casualties to date, as retail investors target hedge funds’ favorite positions.
The fund managed about $ 20 billion as it started this year – far more than competitors such as Melvin Capital and Maplelane Capital, which also got their portfolios amid the attacks. The loss of D1, described by people informed about the situation, contrasts with a 60% increase during the unrest last year.
A growing number of hedge funds, including Steve Cohen’s Point72 Asset Management, caused rapid damage to equities this month. According to people familiar with the matter, Cohen’s $ 19 billion business has been down about 10% to 15% since the beginning of the year. It was among investors in Melvin and plowed another $ 750 million into the business after traders targeted its short positions.
Read more: Cohen’s Point72 loses 10-15% amid Hedge Fund Carnage
Behind it are retailers who use chat rooms and social media to coordinate attacks on popular hedge funds. The groups have put short pressure on stocks like GameStop Corp. and AMC Entertainment Holdings Inc. launched, which in turn forced money managers to settle bets urgently. Hedge fund clients acquired by Goldman Sachs Group Inc. detected, covered shorts at an almost unprecedented rate over the past two weeks.
Read more: Hedge funds reduce equity exposure at the fastest rate since 2014
Sundheim, 43, started D1 in 2018 after leaving Viking Global Investors where he was chief investment officer.
D1 is being hit to some extent by the attacks because private companies make up about a third of its investments and the business is reducing its exposure. The fund is closed for new investments and does not intend to open for additional capital, one of the people said he should not be named because such decisions are confidential.
The Goldman Sachs Hedge Industry VIP ETF, which tracks the most popular stocks of hedge funds, tumbled 4.3% on Wednesday for the worst day since September. All but one of its members were off for the day. Gross leverage financing, a measure of appetite for hedge funds considering long and short positions, experienced the biggest active reduction since August 2019 on Monday, Goldman data shows.
– Assisted by Zeke Faux