Hennessee: Hedge Funds Turn in 2.14% January Showing

The Hennessee Regulation D Index returned 4.51% as an improving economy continues to be an excellent backdrop for this strategy, especially when the need for capital increases and banks are reluctant to lend, Hennessee said. Following on its heels was the Hennessee Health Care and Biotech Index , with a return of 4.50%. The biotech portion of that index was up 5%, boosted by JP Morgan’s mid-month conference where general consensus was very positive. Additionally, the FDA seems motivated to accelerate approval of promising drugs, Hennessee said in an announcement.

Third on the January performance list was the Hennessee Europe Index, posting a 3.63% return. Fundamentals are not as good in Europe as in the US, but money flows into Europe are excellent, amounting to $172 billion in new capital, Hennessee said in its announcement.

The Hennessee Short Biased Index was the worst January performer, posting a loss of 0.69%, as the strong broad market gains once again made it very difficult for dedicated short sellers. The Hennessee Fixed Income Index was the second worst with an increase of 0.68%, as there was a sell-off in bonds across the board. “Long/short equity hedge funds beat the S&P 500 in January with only average net long exposures at 40%,”stated Charles Gradante, managing principal. “Key to their success in January was their protection of the downside as the market sold off during the last week in January.”

The third worst performer was the Hennessee Merger Arbitrage Index, posting a 0.90% return . Although the performance was relatively strong for merger arbitrage, especially given the current opportunities, it was weak relative to the other sub-strategies, which put in a strong month, Hennessee said.

The broad market indices were up in January, with the S&P 500 DRI Index gaining 1.84% and the Dow Jones Industrial Average increasing 0.33%. The Nasdaq Composite Index climbed 3.13%.