Household hedge fund names such as Bill Ackman’s Pershing Square, Daniel Loeb’s Third Point Capital and David Einhorn’s Greenlight Capital are nowhere to be found in the Barron’s 2016 List of Best 100 hedge funds. Instead, these firms which bet heavily, and incorrectly, on a handful of investments, have been replaced by a variety of newer, smaller, nimbler, and in the case of the top fund for 2016, algo-driven, hedge funds.
As Barron’s notes, even on Wall Street, “the name of the Barron’s Penta No. 1 hedge fund this year is one that many serious investors wouldn’t recognize. Parametrica Management, a small Hong Kong – based firm, posted a three-year compound annualized return of nearly 30% by the end of 2015, about double the return of the Standard & Poor’s 500 index. A remarkable gain of 45% in 2015’s occasionally frightening market helped the stock-focused quants at Parametrica’s Global Master fund leap 58 spots from its previous ranking.”
Appropriate for the times, Parametrica ignores fundamental analysis entirely and instead specializes in stat arbitrage, a strategy that relies on quantitative analysis to identify instantaneously mispriced asset classes anywhere in the world – think Jim Simmons flagship Renaissance Medallion fund. These market-neutral funds feed on the kind of instability and dispersion in prices that overtook markets for much of 2015 in the U. S., Europe, and especially emerging markets.
Some more details on this year’s winner.
This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.
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