April 14, 2016 / 7:21 AM / 3 years ago

Hedge funds' billion-dollar club loses members in 2015

BOSTON (Reuters) - The exclusive club of Americas-based hedge funds managing more than $1 billion in assets shrunk a bit in 2015 after market gyrations in the second half of the year took a bite out of returns and prompted some investors to pull money, data released on Wednesday show.

Numbers compiled by industry news and data provider Hedge Fund Intelligence show that 312 North and South American-based hedge funds - mostly in the United States - ranked in the Billion Dollar Club at the start of 2016, down from 316 at the start of 2015 and 314 in July 2015.

J.P. Morgan Asset Management topped the list of firms that slimmed down the most, managing $49.2 billion in assets at the start of 2016, down from $59.30 billion at the start of 2015, the data showed.

Despite shrinking in size, J.P. Morgan still ranks as the second biggest player, after Ray Dalio’s Bridgewater Associates, which oversees $104 billion in assets.

Claren Road Asset Management, which is majority-owned by Carlyle Group, suffered the second biggest drop in size, with assets down by nearly $4 billion to $1.23 billion in January 2016. The credit-oriented fund, which had been popular with pension funds, had posted poor returns for more than a year, prompting many investors to exit.

Assets declined at 43 percent of the firms last year, with an average decline in assets of 16 percent, the data showed.

John Paulson and William Ackman, two of the industry’s best-known billionaire investors, were also among the biggest losers in assets, stung by holdings of shares of drugmaker Valeant Pharmaceuticals Inc, which crashed 60 percent in the second half of the year, shrinking assets of the funds of both Paulson and Ackman by roughly $3.5 billion.

Paulson & Co., whose assets peaked at $38 billion several years ago, oversaw $14.21 billion on Jan. 1, 2016 while Ackman’s Pershing Square Capital Management had $14.41 billion in assets, the data show.

But there were winners as well. Dalio’s Bridgewater posted a $14.60 billion gain in assets followed by AQR Capital Management’s $12 billion gain, putting AQR’s total assets at $47.20 billion, making it the third biggest U.S. hedge fund firm.

The next largest firm, Daniel Och’s Och-Ziff Capital Management, had $44.6 billion in assets in January. A bribery scandal and tough market conditions have cut Och-Ziff assets to $42 billion now.

Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler

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