By Louis Goss

Bill Ackman’s Pershing Square Capital Management has re-entered the ranks of the world’s 20 best performing hedge funds following a bumper year for the New York money manager after it previously dropped off the list in 2015.

The New York fund, which has $17.9 billion in assets under management (AUM), generated net gains worth $3.5 billion in 2023, bringing its overall gains since its inception in 2004 up to $18.8 billion, research by LCH Investments shows.

Pershing Square’s huge gains saw it supplant Louis Bacon’s Moore Capital Management to take bottom place on LCH’s list of the world’s 20 top performing hedge funds in what was described as a “remarkable comeback” for the New York firm.

The New York fund previously fell off the list nine years ago after suffering a series of major losses on investments in companies including consumer goods company Procter & Gamble (PG), retail chain JCPenney , and multi-level marketing company Herbalife Nutrition (HLF).

Now, Ackman’s fund has re-captured a place alongside the 20 top ranking funds, having generated returns worth $12.3 billion over the past three years, in sums equivalent to almost two thirds of all gains it has generated since starting up in 2004.

This puts Pershing Square back on the list of top performing funds that together generated outsized net gains worth $67 billion in 2023 alone – equivalent to 31% of all gains made across the hedge fund sector last year.

   Hedge fund         AUM    2023 gains $bn  Overall gains  Year started 
   Citadel            56.8   8.1             74.0           1990 
   D.E. Shaw          43.8   4.2             56.1           1988 
   Millennium         61.9   5.7             56.1           1989 
   Bridgewater        72.5   (2.6)           55.8           1975 
   Elliott            62.2   5.5             47.6           1977 
   Soros              N/A    N/A             43.9           1973 
   TCI                50.0   12.9            41.3           2004 
   Viking             30.5   6.0             40.9           1999 
   Baupost            27.4   3.8             37.0           1983 
   Farallon           40..4  2.6             35.7           1987 
   Lone Pine          15.9   4.2             35.6           1996 
   Appaloosa          17     2.7             35.0           1993 
   SAC/Point 72       31.0   3.0             33.0           1992 
   Och Ziff/Sculptor  28.7   2.3             32.2           1994 
   Brevan Howard      35.6   0.4             28.5           2003 
   Egerton            14     2.3             23.9           1995 
   Davidson Kempner   37     1.8             21.0           1983 
   King Street        9.5    0.9             19.5           1995 
   Caxton             13.4   (0.3)           19.5           1983 
   Pershing Square    17.9   3.5             18.8           2004 

For reference, the top 20 funds manage just 18.9% of all assets controlled across the sector, managing assets worth $665.5 billion compared to the $2.85 trillion in assets managed by all other remaining funds.

These huge gains have, however, seen the top 20 generate 83% of all gains generated by hedge funds over the past three years.

In monetary terms, this has seen the top 20 generate net gains worth $775.4 billion since their inception compared to the $862 billion gains made by all remaining hedge funds in the sector.

In percentage terms, the top 20 produced average returns of 10.5% in 2023 compared to the 6.4% average returns across the sector.

Sir Chris Hohn’s The Children’s Investment Fund Management (TCI Fund) achieved the greatest gains in 2023, generating net gains worth $12.9 billion last year, bringing its overall net gains since inception up to $41.3 billion since starting in 2004.

TCI Fund’s huge gains in 2023 saw it jump seven places in the rankings of those hedge funds that have made the largest amounts of money since starting, rising from 14th place in 2022 to 7th place on this year’s list.

Ken Griffin’s Citadel LLC has, meanwhile, generated higher gains since its inception than any rival hedge fund in the world, in achieving net gains worth $74 billion since starting in 1990, on the back of gains worth $8.1 billion in 2023.

Citadel’s massive $74 billion gains over the past three decades saw it sit well out in front ahead of joint second placers D.E. Shaw & Co and Millennium Management, which have both generated net gains worth $56.1 billion since starting in 1988 and 1989 respectively.

Together these top three hedge funds have generated almost two fifths (38.3%) of all gains achieved by the hedge fund sector over the past three years, in reaping net gains worth $71.2 billion, despite controlling just 4.6% of all assets managed by the sector.

Edmond de Rothschild CEO Rick Sopher explained the outsized gains made by the world’s top hedge funds was partly a result of their willingness to pay huge amounts of money for access to top talent. “These firms are clearly also able to pay more aggressively to attract the best talent,” Sopher said.

Ray Dalio’s Bridgewater Associates trailed closely behind the top three firms, having generated $55.8 billion since starting in 1975, despite making a $2.6 billion loss in 2023 which saw it drop from 2nd to 4th place on LCH’s list.

Elliott Investment Management jumped a single place in the rankings, from 6th to 5th place, having generated net gains worth $47.6 billion since its inception in 1977, on the back of net gains worth $5.5 billion in 2023.

-Louis Goss

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

 

(END) Dow Jones Newswires

01-22-24 0201ET

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