By Britt Erica Tunick
Hedge fund investors haven't forgotten the carnage of 2008, and managers who learned its lessons—as well as those making stellar returns—garnered the top marks in AR's second annual Hedge Fund Report Card.
York Capital Management, with $11.35 billion, edged $50.9 billion Bridgewater Associates out of the lead, scoring 52.63 points out of a possible 60 and jumping nine notches from its tenth-place ranking in last year's survey. "I think the world of York's founder [Jamie Dinan] in terms of his ability and his integrity, and needless to say, I am impressed with his performance," says Richard Galanti, chief financial officer of Costco, who has been an investor in York since its inception. Adds another institutional investor in the firm: "They were very bearish at the end of '08, but then they were very adaptable when they realized that things had changed in '09... when they realized equities weren't going to be as bad as they thought, they were able to make that adjustment and to make something off of it, which is very admirable."
Investors say their main concern now is performance, as evidenced by alpha generation jumping into second place of the six factors that investors took into consideration when scoring the top 50 firms in the AR Billion Dollar Club for the report card. York, which did not restrict redemptions during 2008—which investors appear to remember—also ranked high in transparency and liquidity, two of the other six factors. Investors rated firms on alignment of interests, alpha generation, independent oversight, infrastructure, transparency and liquidity terms, scoring firms in each of those categories on a scale from 1 to 10, for the possible total of 60.
As investors have changed the way they look at many of the industry's largest hedge fund firms, there's been a major shift in the lineup. Fortress Investment Group gained the most over the past year. And although big names like Paulson & Co., Tudor Investment Corp. and Eton Park Capital Management fell, JPMorgan: Highbridge Capital Management fell the most.