* Average hedge fund down 0.55 percent-survey
* Stock market decline hurts, gold bets do well
* Macro, relative value strategies show strength
(Updates with Hedge Fund Research numbers)
By Svea Herbst-Bayliss and Emily Chasan
BOSTON/NEW YORK, Sept 8 Most hedge funds lost
money again in August as hundreds of managers, including some
of the industry's best-known names, stumbled when stock markets
Funds, on average, lost 0.55 percent last month after
gaining 1.9 percent in July, according to data released on
Wednesday by New York consulting firm Hennessee Group. Hedge
funds lost 1.29 percent in June and fell 3.21 percent in May,
reported Hennessee, one of a handful of groups that track
performance and asset flows in the secretive $1.5 trillion
Hedge funds again outperformed the broader market during
the month, leaving their wealthy investors with gains for the
year as stock indices nurse losses, but the new numbers still
cast a pall over the industry.
John Paulson, who earned some $15 billion with a bet that
the U.S. housing market would crumble in 2007, told investors
that his flagship Advantage Plus fund fell 4.3 percent last
month, leaving it down 11 percent for the year, said people who
invest with him. [ID:nN07247495]
He bet that the economy would rebound strongly, but fresh
worries that the recovery may be tepid, coupled with persistent
fears about Europe's debt crisis, hurt him and many others.
"Managers remain cautious given the global economic
uncertainty, though the consensus is that we will likely avoid
a double-dip recession," said Charles Gradante, co-founder of
The numbers are being released at a time when many pension
funds are sitting on piles of cash that some expect to invest
with hedge funds to boost returns.
The Hedge Fund Research Inc fund weighted composite index,
which also tracks hedge fund performance, was up 0.38 percent
for August, boosted by strong returns from funds with macro and
relative value investing strategies.
Some managers who remembered May's tumult played it safe
and cut risky bets to protect capital when stocks declined
sharply in the month, leaving them with better returns. The
benchmark Standard & Poor's 500 index .SPX fell 4.7 percent
Kenneth Griffin's flagship funds at Citadel inched up 0.75
percent during August to be up 1.78 percent for the year, a
person invested with the fund said.
Steven Cohen's SAC Capital Advisors, one of the world's
biggest hedge funds with $12 billion of assets, gained 1
percent in August after a 3.7 percent gain in July. For the
year, the fund is up 6 percent.
As of mid-August, the most recent date for which data is
available, Phil Falcone's flagship fund at Harbinger was down
14 percent for the year after falling 2.3 percent in the first
half of the month.
However, some bets on broad macro investing strategies,
distressed situations, bonds and gold have been paying off for
hedge fund managers.
According to Hedge Fund Research, macro funds rose 2.16
percent in August and short bias funds were up 3 percent, while
fixed income funds were also strong performers in August and
are now up about 9.9 percent for the year. Equity hedging was
among the poorest performing strategies in the month, while
event driven funds were nearly flat in August, the firm said.
Paul Singer's Elliott Management Corp, which specializes in
distressed investing, inched up 0.80 percent last month to be
up 5.69 percent for the year.
Big bets on gold also performed well for managers like
Paulson and Greenlight Capital's David Einhorn, as their
gold-heavy funds saw strong returns in August as investors'
fled to safety in the yellow metal.
Paulson's gold fund was up 8.96 percent in August, while
Einhorn's fund returned 4.1 percent net of all fees and
expenses in August.
(Reporting by Emily Chasan; Editing by Gerald E. McCormick and