Hedge fund update featuring MMCAP, Waratah, Bedford Park and Senvest

A pot pourri of 2021 hedge fund numbers.

If the market goes down, that’s when we’ll really sing.

-Jack Lawrence, Ravi Sood’s mentor

You can sue me, and you’ll win. But you’ll never collect.

-Also Jack Lawrence

I’ll be honest, I get depressed when I try to write an update on the hedge fund sector, also known as the Alpha Bullcrap Industrial Complex. Not that they’re all uniformly bad. Let me know what funds you think are worth talking about (good or bad) and I’ll try to get some info.

I think the most proven opportunistic hedge fund in Canada, by longevity and outperformance is MMCAP. They were up 55% last year after being up 47% in 2020. The fund is compounding at more than 25% since 2002. They have an offshore structure (it’s not illegal for Canadians to invest offshore, it just creates some administrative complications). They also have a more retail, RRSP eligible product offered through Spartan Funds. Last year, they profited from SPACs and a directional call on uranium, themes they remain exposed to. The uranium call is unusual for them as their primary focus is exploiting market inefficiencies, mainly various forms of arbitrage.

Perennial Frank J. Selke Trophy winner Waratah Performance was up 16.6% in 2021. The firm now manages $3.4B across various, mostly conservative strategies, $171m of that belongs to employees.

One younger hedge fund I have been told to track is Jordan Zinberg’s Bedford Park Opportunities Fund, which was up 34% in 2021. They focus on old school stock picking and trading in Canadian small caps. Two big winners last year were Goeasy (up 88%) and Converge Technology Solutions (up 120%). They used minimal leverage and had no energy exposure. The fund was up 33% in 2020, a stunning recovery from being down 42% in the first quarter.

If you want to track hedge fund performances closely, subscribe to the mailing list of Brian Viveiros by writing to brian@stackcapitalgroup.com. There’s also a paying service called Global Manager Research.

The best performing reputable hedge fund last year - Senvest Management - has its parent company and management in Montreal. They were up 85%, primarily on the back of making nearly $1B on the GameStop frenzy. Senvest Capital (the parent company) is traded on the TSX and the Mashaal family behind it owns nearly 55% - worth some $500m.

For my original article on Senvest last year, I sent a simple email to Senvest fund manager Richard Mashaal asking if he still had ties to Montreal (seeing as how the hedge fund itself was based in New York). Richard did not reply. And yet, later on, he gave an extensive interview to my cross-town rival the failing La Presse talking about everything from his first job, to his children to how he now splits his time between California, New York and Montreal. This is unacceptable. I am publishing a photo of Richard Mashaal’s Montreal home in retaliation. Expect a more combative tone this year.

Hedge fundsMoney Managers