Monday, January 11, 2016

The Best And Worst Hedge Funds of 2015?

Kate Kelly of CNBC reports, Plotkin, Edelman among big hedge fund winners in 2015:
For the average hedge fund, 2015 was nothing to brag about, and even may have proved humiliating.

But a handful of portfolio managers outperformed their peers by a big margin, largely thanks to smart stock picking and shorting in areas like consumer stocks and biotech names.

One of the very best performances — about 47 percent upside apiece, according to investors in both funds — was shared by a pair of hedge funds: Melvin Capital, the roughly $1.5 billion hedge fund run by SAC Capital alumnus Gabriel Plotkin, and Perceptive Life Sciences, the $1.5 billion fund run by veteran biotech investor Joe Edelman.

Plotkin, a longtime consumer-stocks trader who declined through his lawyer to comment on the performance, appeared to benefit from a series of well-timed long positions, according to filings.

Those positions included Amazon, a top holding that rose 117 percent, Constellation Brands, which was up 46 percent, and Alphabet, whose Class-A shares rose 47 percent. But Plotkin likely also made good money on the short side, with bearish positions that are not reported in regulatory filings.

"If you were a good retail investor, last year on the shorting side was one of the best years I've ever seen," said a fellow consumer-stock investor who has a stake in Melvin.

Plotkin opened Melvin late in 2014 after leaving his longtime perch at SAC, Steve Cohen's hedge fund that transformed into a private money manager called Point72 earlier that same year.

Edelman attributes last year's success to a handful of long bets like Sarepta Therapeutics, which focuses on ribonucleic acid drugs and was up 166 percent, and Neurocrine Biosciences, which makes drugs to treat neurological and endocrine diseases and was up 153 percent. He founded Perceptive in 1999 and focuses on developmental-stage biotech investments, both long and short,

Perceptive, which started small but now has a team of six analysts, focuses on compelling therapies that seem particularly well-timed in the market.

"It's all about probabilities, where's it going if it works, where's it going if" it doesn't work, Edelman said in a telephone interview. "Sometimes we just have more confidence in our long ideas than our short ideas and I would attribute that to the success of the new technologies."

Looking at the year ahead, he said, the pipeline of new biotech drugs is particularly compelling, he said.

While Melvin and Perceptive were up last year by a huge margin — notably higher than that of the average hedge fund, which according to a preliminary estimate by HFR was down 3.6 percent — other major hedge funds also churned out double-digit returns.

Element Capital, a fixed income-oriented fund, was up 26 percent through the end of November, according to an HSBC report; final performance numbers aren't yet available (and the fund's manager, Jeff Talpins, declined through a spokesman to comment).

Citadel's main equities fund was up 17.2 percent, according to an investor. Renaissance Technologies' Institutional Equities Fund rose 17 percent, according to someone familiar with the matter, and the Maverick Fund rose 16.5 percent, according to someone familiar with that performance. The funds did not comment.
I track Perceptive and Melvin Capital in my quarterly overview of top funds' activity. You can view their respective holdings here and here but be careful as they both likely got whacked last week. 

As far as Element Capital, go back to read my comment on why investors should beware of large hedge funds leveraging up to load up on Treasurys. Jeffrey Talpins delivered solid gains last year and as the deflation tsunami hits the global economy, he should continue doing well in 2016.

But big hedge funds using big leverage make me nervous. Just take a look at 'hedge fund king' Ray Dalio. His All Weather Fund was down 7% last year:
Hedge fund billionaire Ray Dalio’s key All Weather Fund, which aims to perform well in both good and bad markets, suffered annual losses for the second time in three years in 2015. The All Weather Fund returned -7% in 2015. All Weather’s performance is yet another indication of the tough year prominent money managers had in 2015, a year in which the average hedge fund manager lost money, according to HFR.

Dalio is the founder of Bridgewater Associates, the biggest hedge fund firm in the world, and the All Weather fund has been an important part of the firm’s success. All Weather fund manages about $70 billion and employs a so-called risk parity strategy that tries to consistently generate positive returns by leveraging bond investments to balance portfolios.

But in recent years Bridgewater’s All Weather fund has struggled. In 2013, All Weather returned -4% net of fees. It rebounded in 2014, returning 8.6%. All Weather’s 2015 setback could dent Dalio’s reputation among pension funds and other institutional investors as a money manager who can consistently produce steady returns. All Weather has produced annualized net returns of 7.7% since its inception in 1996.

Dalio helped popularize the risk-parity strategy on Wall Street and some $600 billion in assets are now managed in such a fashion. But some money management firms that utilize the strategy experienced problems in 2015. Risk-parity strategies were also blamed in 2015 by some in the investment community, like billionaire hedge fund manager Leon Cooperman, for contributing to big swings in financial markets, particularly in the summer.

There were some big bright spots, however, for Dalio in 2015. Bridgewater’s huge flagship Pure Alpha hedge fund returned 4.7% net of fees last year, besting both the average hedge fund manager and the U.S. stock market. It had been up even more before it hit a rough patch in December and lost some ground. Bridgewater’s Pure Alpha Major Markets, another hedge fund launched in 2010 that manages some $15 billion, returned 10.6% net of fees in 2015.

The positive Pure Alpha performance looks good in a hedge fund industry that generally had big problems in 2015. Pure Alpha has had annualized net returns of 13% a year since 1991, having made money in the last 15 years. In 25 years, it has only lost money for its investors three times and even churned out a positive 9.4% return in 2008 amid the financial crisis.
Pure Alpha's performance while positive is unimpressive, especially for the world's biggest hedge fund which has more money and macro analysts than they know what to do with. In a year full of macro events, Bridgewater's Pure Alpha should have made a lot more money!!

Most pension funds I know (like bcIMC, OMERS and other large Canadian and U.S. pension funds) are heavily invested in the All Weather Fund and they're losing money in the last three years, especially last year when mad money wreaked havoc on risk parity strategies.

This isn't good for them or Ray Dalio who once told me that when he kicks the can, his trust fund will all be invested in the All Weather Portfolio (if you ask me, risk parity strategies over-promise and under-deliver but Bridgewater's faithful still think this is the holy grail of investing).

Anyways, enough of Ray Dalio and Bridgewater. I warned all of you three years ago the world's biggest hedge fund was in trouble but none of you listened to me. Instead you listened to your useless investment consultants that keep shoving you in the hottest hedge funds destined to disappoint you.

Let's continue looking at the best and worst hedge funds of 2015. Lawrence Delevingne of Reuters reports, Caution, teamwork trumped bravado for some hedge funds in 2015 (updated Jan. 15th):
In a disappointing year for hedge funds, a few big winners shared a perhaps surprising trait: actually hedging.

Funds who placed a broad array of bets produced some of the strongest gains, beating star managers like Bill Ackman, David Einhorn and Larry Robbins who invested more narrowly and ended 2015 with steep losses.

Those who took a more conservative approach - often using large teams to further diversify investments - posted some of the strongest gains. Funds to produce double-digit returns in 2015 include Citadel, Millennium Management, Visium Asset Management, Tourbillon Capital Partners and Blackstone Group's Senfina Advisors, according to private performance information seen by Reuters.

Those increases came during a year when the average hedge fund, as represented by the Absolute Return Composite Index, fell 0.13 percent.

The S&P 500 Index gained 1.4 percent, with dividends, but many investors were burned during a volatile year that included a rout in the junk bonds of energy companies, plummeting healthcare stocks, and market gyrations pushed by fears of a Chinese economic slowdown.

Those that beat the odds and won in 2015 underscore the types of hedge funds large risk-adverse investors such as pensions and endowments are flocking to.

The firms usually take a neutral approach to the market's ups and downs, spreading out their bets and avoiding large wagers on any one idea or theme.

"Having the discipline to stay hedged," said Matt Litwin, director of research at investment adviser Greycourt & Co., "paid off in a big way."


Hedge funds known for their big teams scored in 2015.

A prime example is Millennium Management, the $34 billion firm led by Brooklyn-born Israel "Izzy" Englander. Its main Millennium International fund gained 12.65 percent for the year, according to performance information seen by Reuters.

Millennium's hallmark is a sea of different investments, including thousands of bets on stocks alone. The New York-based firm employs more than 1,800 people and 180 trading teams, making its staff among the largest in the world for hedge fund.

Millennium's volume of investments are managed for risk by a separate team of employees and the portfolio is market-neutral, meaning the value of the bets on securities appreciating in value, so called longs, are equally balanced with those on them declining, so-called shorts.

Citadel, the $25 billion fund manager led by billionaire Ken Griffin, gained 14.3 percent over 2015 in its main multi-strategy hedge funds, according to a person familiar with the returns.

Citadel's funds, backed by a 700-person investment team, invest in stocks, bonds, commodities, macroeconomic trends and more. Each category was profitable for the year, according to the person. The firm's equity-focused hedge funds also gained 17.2 percent, according to the person. Both types of funds run at or near market neutral, meaning they likely benefited substantially from bets against stocks and other securities.

Other winning multi-manager, market neutral firms, according to figures seen by Reuters, include Blackstone's Senfina, the new, nearly $2 billion unit that gained 23 percent between January and November ; Jacob Gottlieb's $8 billion Visium, whose Global Fund gained 10.3 percent in 2015; Ari Glass' $190 million Boothbay Fund Management, whose main fund gained an estimated 10.15 percent for the year; and Dmitry Balyasny's $8.1 billion Balyasny Asset Management, whose Atlas Enhanced Fund gained about 5.9 percent in 2015.

To be sure, such funds can lose money, even if they aggressively attempt to manage risk, because they often use leverage, or borrowed money, to increase the size of their bets.

The Absolute Return Multi-Strategy Index fell nearly 10 percent in 2008. It was the only down year for the hedge fund strategy since tracking began in 1998; last year, the average gain was 2.25 percent.


Other funds with more centralized investment management also did well by spreading their bets, especially shorting stocks.

Eton Park Capital Management, led by Eric Mindich, formerly of Goldman Sachs, gained 7.5 percent for the year in its main fund. The $9 billion firm's bets on Japan, derivatives and stocks, both long and short, drove the returns, according to a person familiar with the situation.

Tourbillon, led by SAC Capital Advisors and Carlson Capital veteran Jason Karp, gained about 11 percent over 2015, according to a person familiar with the situation. The approximately $4 billion firm rose on both long and short bets on stocks, according to the person. They included winning bets on travel business Expedia rising and a wager on biopharmaceutical company MannKind Corp. falling.

And Anson Group, the $500 million firm based in Dallas and Toronto, scored a 16.2 percent gain last year in its main hedge fund, according to a person familiar with the situation.

The performance was driven by many small stock picks, especially bets on their decline, the person said. The fund is managed by Bruce Winson, Moez Kassam and Adam Spears.

All three firms run portfolios that are at or close to market neutral. Firms contacted for this story did not respond to requests for comment or would not speak on the record.
Bloomberg's Katherine Burton, Saijel Kishan and Nishant Kumar also report, Blackstone, Citadel, Lansdowne Gain as Rivals Falter in 2015:
Hedge fund managers have complained all year about a lack of liquidity and volatile markets in explaining some of the worst performance since the financial crisis.

Yet a handful of multibillion-dollar firms including Blackstone Group LP, D.E. Shaw, Millennium Partners and Citadel have managed to side-step those problems and post double-digit returns.

Many of the big winners are firms that allocate money to multiple teams investing across a broad range of markets, with each group managing just a fraction of the total assets. This year’s biggest losers include managers with concentrated portfolios, who piled into the same equities -- Cheniere Energy Inc., Williams Cos., SunEdison Inc. and Valeant Pharmaceuticals International Inc. -- before they tumbled in the second half of the year.

“In 2015, a lot of the underperformance can be explained through crowding,” said Stan Altshuller, chief research officer at Novus Partners, which analyzes portfolio data for hedge funds and other investors. “Hedge funds represented almost half of the market cap of some of these companies.”
Multi-Team Funds

The top performer among the multiteam funds is Blackstone’s Senfina Advisors, which started with stock-focused managers in 2014. It has fewer than 10 teams managing money now, according to a person familiar with the fund. Tom Hill, vice chairman at Blackstone, said last year he expects the fund to run several billion dollars by the end of 2016.

Izzy Englander’s Millennium, which runs $34 billion over 180 teams, is on track to produce its third consecutive year of double-digit returns, performance that helped the firm attract a net $4.1 billion so far this year.

Citadel, run by Ken Griffin, hasn’t returned less than 11 percent a year since the financial crisis, when it lost 54 percent. Its teams manage money across credit, stocks, fixed income, macro, commodities and quantitative strategies.

Among hedge funds based in Europe, the $12 billion Lansdowne Developed Markets Master Fund, which seeks to profit from rising and falling shares, gained 16.2 percent in the first 11 months of the year, while the $8 billion Marshall Wace Eureka Fund returned about 11 percent, according to people with knowledge of the matter. The Global Financials Fund managed by $2.7 billion hedge-fund firm Algebris Investments (UK) LLP gained just over 22 percent, according to a company spokeswoman.

Overall, hedge funds have barely made money this year through November, and are heading for their worst performance since 2011, when they lost 5.2 percent. By comparison, the Standard & Poor’s 500 Index returned 3 percent through November, intermediate U.S. Treasuries gained 2 percent and commodities, as measured by a Bloomberg index, have slumped 22 percent.

Some of the best known hedge fund managers have posted losses as bad or even worse than in 2008. David Einhorn’s Greenlight Capital is poised for its second losing year in almost two decades after dropping about 21 percent through November. Bill Ackman told investors that 2015 is on track to be the worst year ever for his Pershing Square Capital Management, with a loss similar to Greenlight’s.

Some high-profile funds have closed this year as well, primarily from wrong-way currency bets, including macro funds run by Fortress Investment Group, Bain Capital and BlackRock Inc. Michael Platt’s Bluecrest Capital Management, once one of Europe’s biggest hedge funds, told clients this year it would return money and focus on managing Platt’s wealth and that of his employees.

Officials for the hedge fund firms declined to comment on performance.
Rob Copeland of the Wall Street Journal also reports, A Bold Few Traders Earn Billions Flouting Rivals:
Most Wall Street traders early this year predicted oil prices would rebound through 2015 and buoy the drillers and equipment providers with close ties to crude. But John Armitage believed more trouble was ahead.

That uncommon conviction and related bearish bets helped his firm, Egerton Capital LLP, earn $1.5 billion after fees, making Mr. Armitage one of the few to grab a big score in a year that bewildered many on Wall Street.

Many star traders had a rocky year as consensus predictions persistently came up short.

First a move en masse by hedge-fund and private-equity firms into beaten-down junk-rated energy bonds backfired when oil prices fell further. Then the stock of hedge-fund favorite Valeant Pharmaceuticals International Inc. more than halved following controversy about its business model.

Meanwhile, the U.S. Federal Reserve repeatedly pushed back its long-anticipated interest-rate rise, dragging down funds that specialized in macroeconomic prognostications.

The average hedge fund is down more than 3% this year, according to researcher HFR Inc. It is the latest of several disappointing annual performances for managers who promise to churn out profits even in volatile conditions.

The S&P 500 nears year-end roughly flat following painful swings throughout 2015 and far below the 8.2% growth forecast of bank and money-management strategists polled by researcher Birinyi Associates at the start of the year.

Those who did well defied conventional wisdom. Take Maverick Capital Ltd. founder Lee Ainslie, who formed a contrarian take on Wall Street’s most widely held stock: Apple Inc.

The investor thought Apple was due to disappoint, but he was loath to take a lone stand against the world’s biggest company by market capitalization even as he decided to avoid some shares owned by rival hedge funds beginning in May.

So Maverick’s San Francisco-based technology team found a different way to channel that instinct. Maverick placed bets against makers of parts and accessories for Apple products, including many based in China, people familiar with the matter said.

That stance reaped profits when the country’s economy took a dive this summer and worries mounted about sales growth for Apple products, including the iPhone. Apple shares have fallen 15% in the back half of the year.

The Maverick fund’s 16% gain in the year to date amounts to more than $1 billion in trading profits for 51-year-old Mr. Ainslie, who was initially backed by Texas entrepreneur Sam Wyly.

Other hedge funds now are coming around to Mr. Ainslie’s recent approach by trading against the views of their peers.

“We’re consciously trying to be in areas where there isn’t as much hedge-fund concentration,” said Matthew Iorio, founder of $1 billion hedge-fund firm White Elm Capital LLC.

Mr. Iorio said he is staying away from owning “what’s obvious,” such as big U.S. banks that may benefit from a recent decision by the Federal Reserve to raise interest rates for the first time in nearly a decade.

The direction of oil prices was hardly obvious in early 2015 when the reclusive Mr. Armitage, who rarely speaks in public and prefers to spend his weekends reading company research reports at home, pressed bets against already downtrodden energy stocks that others thought were due to rebound.

He did so because of concerns about emerging markets and the ability of the Organization of the Petroleum Exporting Countries to agree to curb global production.

It turned out to be the right call as commodities continued to crater and companies that provide oil-field services—and had been targeted by Egerton—dived again in value. Mr. Armitage’s $15 billion London firm quietly booked the $1.5 billion profit with its bearish energy wagers and overall pivot to safer markets in the U.S. and Europe.

In currencies, a $5 trillion area that has minted hedge-fund billionaires in decades past, few foresaw the big moves during 2015. But Ray Dalio’s Bridgewater Associates LP, the world’s largest hedge-fund firm, scored a double-digit percentage win early in the year betting against the euro’s drop.

Bridgewater lost money most of the rest of 2015, resulting in a roughly 6% return for its main fund near year-end. That is behind the firm’s usual pace, but ahead of most other peers (see my comments on Bridgewater above).

One of the few outsize currency wins belongs to a South Korea-born manager who said she produced a more-than-120% return with bets against the euro, as well as the Australian dollar and Brazilian real as the commodities rout took hold.

Melissa Ko, 48, spoke no English when she moved to the U.S. in her teens. She started her own hedge fund after rising through the ranks at securities firm Bear Stearns & Co. Inc., and continued to invest her own money upon closing the fund two years ago.

This year her gains amounted to $60 million, she said, pushing her personal fortune above $100 million. She used leverage, or borrowed money, of up to eight times to boost returns.

Heading into 2016 she is adding a bearish wager against the Japanese yen and joining peers on a renewed bet against Europe as policy makers’ powers on the continent wane. She said she thinks the euro will fall below parity against the U.S. dollar in the coming year.

“People have become disappointed and soured on the trade,” she said of the of-late reversal for the euro. “But I think it’s just a little blip.”
In a year where most hedge funds have been burned by commodities, John Armitage and a few others like Pierre Andurand who now sees oil sliding to $25 a barrel have managed to make money betting against their peers.

As far as Melissa Ko, she's obviously sharp but I guarantee you she will never in her lifetime produce returns anywhere close to what she delivered last year (she has better odds winning the $1.3 billion Powerball jackpot). More likely, she will blow up or underperform like the rest of the one year wonders who use huge leverage and get lucky timing a big trend.

Then again, given my Outlook 2016, I see no reason not to continue shorting energy, commodity and emerging markets bonds, stocks and currencies but the ferocious moves we've seen tell me to be very careful with one way bets on the long or short end.

So maybe Melissa Ko and John Armitage still have ways to go before these trends reverse but unless a crisis erupts, it will be a lot tougher to continue riding these trends lower. 

As far as Lee Ainslie's Maverick, I love this fund for a lot of reasons. It's a truly great L/S Equity fund and they are able to generate alpha in their long and short books. I don't know if they're shorting Apple here but the risks of a technical breakdown in that stock are rising despite solid fundamentals and an $180 billion war chest).

Interestingly, in its long book, Maverick is the top holder of Pacific Biosciences of California (PACB), a biotech stock I track that had stellar returns in 2015 (click on image):

I mention this not only because I love biotech, which is getting killed this year, but also because if you look at Maverick's top holdings you'll see some familiar names like Google but a lot of unfamiliar names too. I love hedge funds that are not following the hedge fund crowd and those are the ones that will be rewarded in these brutal markets.

In terms of high profile hedge fund losers of 2015, Bill Ackman's Pershing Square lost 21% last year while David Einhorn's Greenlight Capital was down 20%, its second worst year ever. Barry Rosenstein's Jana Partners hedge fund ended the year with a 5.4% loss, marking its first down year since 2011 and only the third time it has lost money for the full year.

There were plenty of other high profile battered and unapologetic hedge fund losers last year, including John Paulson of Paulson Capital, Larry Robbins of Glenview Capital Management and James Dinan of York Capital.

The truth is that 2015 was a brutal year for top hedge funds but don't shed a tear for them as they still collected a big fat 2% management fee on multibillions which is one reason why despite huge losses, they still partied at their year-end shindigs.

So if you ask me, the biggest hedge funds losers are dumb pension funds and sovereign wealth funds that keep sending these over-compensated and over-glorified asset gatherers huge sums so they can get raped on fees.

As I wrote last week in my comment on One Up On Soros:
If you want to understand rising inequality, look no further to the financialization of modern economies and how big hedge funds and private equity funds manage to gather billions in assets and then charge insane fees no matter how well or poorly they perform. It's beyond outrageous, it's the biggest financial scam of our era!
It's quite unbelievable how a handful of hedge funds like Brevan Howard are able to command such huge fees on billions even when they perform poorly. I think it's scandalous, especially in a world of record low rates and deflation. And a lot of hard working folks don't realize their pension contributions are being used to fuel rising inequality.

But alas things are slowly changing. The Financial Times reports global investors are planning to cut their exposure to hedge funds in 2016 following a disappointing performance in the past year, according to a survey:
The poll data, from research group Preqin, will be met with dismay by the hedge fund industry, which had hoped volatile stock markets would encourage investors to seek alternative sources of return. It is also likely to add extra pressure on hedge fund fees.

Preqin’s survey of institutional investors showed that more are planning to cut their hedge fund holdings this year than are planning to increase them, by 32 per cent to 25 per cent.

The downbeat figures, which will be published this month in Preqin’s annual report on the industry, also show that one in three investors were disappointed by returns from their hedge fund portfolio in 2015 and have less confidence in future returns than they had a year ago.

Institutions such as public pension funds have been questioning the high fees charged by hedge funds — sometimes as high as 2 per cent of assets, plus a 20 per cent cut of investment profits — for several years, but have still ploughed more money into the industry in search of returns that are uncorrelated to traditional equity and bond markets.

The size of the global hedge fund industry was assessed by research firm HFR at $2.9tn at the end of the third quarter, but the Preqin survey suggests it may be close to peaking.

A year ago, the same survey showed investors planning to increase their hedge fund holdings, by a margin of 26 per cent to 16 per cent who said they planned to reduce exposure. The balance appeared to tip in the middle of last year, when an interim poll by Preqin first showed a higher number planning to cut their holdings.

The forthcoming report comes on the heels of another disappointing year for hedge funds. Following losses in December, the industry ended down 0.85 per cent for 2015, according to HFR’s fund-weighted composite index.

Energy sector funds and those specialising in distressed debt — many of which piled into oil company bonds before another fall in the oil price — suffered some of the worst losses last year. Tech sector funds and volatility trading strategies performed best.

This was only the fourth calendar year since 1990 in which the industry has shown a negative return, according to HFR.

“Low interest rates, steep commodity losses and intense equity market volatility contributed to a challenging environment in 2015, resulting in a wide dispersion between the best and worst performing funds,“ said Kenneth Heinz, president of HFR.

“With volatility accelerating into 2016, strategies which have demonstrated opportunistic performance throughout 2015 are likely to lead industry performance.”
No wonder hedge funds are bracing for more pain this year. Institutional investors are fed up of doling out huge fees for mediocre returns and some think it's time to hedge against hedge funds. And even if returns are good, in a world of record low rates and deflation, it's simply indefensible to charge a 2% management fee on billions. Period.

Early in 2016, there are a few small hedge funds killing it but it's mostly dog days for hedge funds. Bill Ackman's Pershing Square is already down 11% this year and most other hedge funds are getting clobbered as stocks and commodities are getting slammed.

Last week, Nevsky Capital, a £1bn ($2bn) fund run by Martin Taylor, one of the British Labour Party’s biggest donors, closed its doors, saying it could not make a decent return because of the growing impact of algorithmic computer trading and unpredictable political influences on markets.

After 15 years of posting solid returns, Nevsky Capital, a London-based global long/short equity hedge fund led by Martin Taylor and Nick Barnes, is shutting down, according to an investor letter posted by Zero Hedge (more analysis here).

But while Nevky Capital is shutting down for macro and micro reasons, Soros's protege Scott Bessent and Alan Howard's former partner Chris Rokos are ramping up their respective macro funds in what may be the most brutal environment ever to launch a hedge fund.

And in another interesting development, the Securities & Exchange Commission said on Friday that it has settled its civil enforcement action against Steve Cohen, the perfect hedge fund predator, clearing the way for him to come back to managing billions for external clients in two years (so he can charge them insane fees which at one time were as high 3 & 50). According to a Bloomberg article on why hedge funds are scared straight, Cohen's Point72 defied the hedge-fund slump once again, gaining 15.5% last year, after operating expenses.

Talk about being the "El Chapo" of the hedge fund industry! Oh no, wait, that distinct honor goes to the biggest hedge fund loser of 2015, the now indicted Martin Shkreli (click on image):

God I love this picture. It gives me hope that some scumbag hedge fund managers will be prosecuted for fraud and thrown in jail where they belong.

But for every Martin Shkreli, there are ten other hedge fund cockroaches lurking out there and unlike this dumb egomaniac, they have the common sense to keep a very low profile, making it tougher for law enforcement to detect them (think of Bernie Madoff).

Below, CNBC's Kate Kelly reports early year-end results from some of the most noted hedge funds are likely to strike a sour note with some investors.

And a panel on Bloomberg discusses hedge fund winners and losers in 2015. A very interesting discussion you should all listen to carefully.

Lastly, I embedded the trailer of The Big Short. I saw it over the weekend with my girlfriend and we thoroughly enjoyed it. Great acting and a great script based on Michael Lewis's book.

But the book and movie are incomplete. In particular, they're missing my favorite hedge fund manager of all time, Andrew Lahde, who quit in October 2008 after making a killing shorting subprime debt, and wrote a scathing farewell letter thanking  the idiots on Wall Street with MBAs from Ivy League universities for making it easy for him to short their stupidity.

Every time I discuss "the best and worst hedge funds," I keep coming back to Andrew Lahde and that brutally honest farewell letter he wrote before he wisely disappeared into the sunset. 

The movie is also missing another story, namely, that of a senior investment analyst with Multiple Sclerosis working at PSP Investments at the time, looking at the issuance of CDOs and CDO-squared and cubed products, and warning senior managers of the bursting of the U.S. housing bubble and how it will wreak havoc on credit markets.

He wrote about that experience here and how it cost him his job which he discussed here. But he didn't lose his dignity and amazingly, he continues to write daily comments on pensions and investments and even though he's blacklisted at Canada's Top Ten, he continues to produce excellent analyses which are read by the who's who of the pension and investment world.

So whether you are an over-glorified and overpaid hedge fund guru collecting 2 & 20 on billions or an overpaid Canadian pension fund manager trouncing your bogus private market benchmarks, collecting millions based on a 4-year rolling return, take the time to show this individual some respect and contribute to his blog at the top right-hand side under his picture.

Better yet, you should all look past his neurological disease as he's doing fine and hire him to help you make money in tough markets. That is the right thing to do but he realizes that while movies are full of villains and heroes, in the real world, there are very few good honest people helping people with disabilities no matter how competent they are.

That's fine, these people don't define him or his capabilities. So the next time you read about how great hedge fund managers are, remember other people out there confronting real struggles that still manage to deliver exceptional work without charging you 2 & 20 for leveraged beta!

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