Key Hedge Fund Industry News for Q4 2024

Movchan's Group

Mar 19, 2025

Based on the results of the fourth quarter of 2024, we found the following news to be the most interesting:

• Year of Revival: Hedge funds are gaining strength again.
• The largest hedge funds return money, smaller funds get a chance to grow.
• American activists increase pressure on British companies.
• Hedge funds ramp up hiring of doctors and scientists to analyze the pharmaceutical sector.
• Global hedge funds expand presence in Hong Kong.
• Founder of Hindenburg Research closes the firm.
• Said Haidar's fund experiences the worst period in its history.
• Nouriel Roubini launches ETF to protect against economic risks.

  Industry Trends

Year of Revival: Hedge funds are gaining strength again 

In 2024, hedge funds demonstrated one of the strongest results in the last decade. According to the PivotalPath index, which tracks the performance of more than 1,100 hedge funds, the average return after fees for 2024 was 10.7% — the best figure since 2020, when funds earned 11.4% amid pandemic-induced volatility. Before that, double-digit growth was noted in 2013.

The successful result in 2024 looks promising for an industry facing criticism for high fund fees, which often show mediocre results. Despite an impressive year, the total return of hedge funds still lags behind the overall growth of the S&P 500, which reached 25% in 2024, including dividends. However, the appeal of hedge funds to large investors, such as pension funds, lies not only in growth but also in capital protection during downturns and lack of correlation with other assets.

According to PivotalPath, the best performers were funds trading stocks of companies in the technology, media, and telecommunications sectors, with an average return of nearly 23% in 2024. It is worth noting that there was a large dispersion in stock returns in 2024. This provided an opportunity for the most skilled managers to outperform indices and competitors by selecting potential 'winners' and taking short positions on potential 'losers.' Funds working with distressed debt and quantitative equity strategies showed results in the range of 15–16%.

From the late 1990s until the global financial crisis, hedge funds often showed double-digit returns per year. However, everything changed when the easy monetary policy of the 2010s reduced market volatility, and the industry largely shifted its focus from large, high-risk bets to achieving stable returns with more attention to risk management.

Thus, 2024 showed that hedge funds can deliver strong results, but the question remains: will they be able to maintain this momentum, or will the industry face difficulties again in the near future?

The Year That Hedge Funds Got Their Mojo Back

Wall Street Journal, 18 January 2025 Caitlin McCabe

The largest hedge funds return money, smaller funds get a chance to grow

Some of the most well-known hedge funds, such as D.E. Shaw, Point72, Citadel, and Element Capital Management, are returning significant amounts to clients — about $15 billion in 2024. These funds consciously limit the inflow of new capital to maintain flexibility in asset management.

For example, Point72, managed by Steve Cohen, plans to return up to $5 billion, and Element Capital Management has already returned $6 billion to clients last year. Bridgewater Associates is also returning some funds, and Citadel, which manages about $65 billion in assets, offered clients the opportunity to lock in profits after a 15% growth of its main fund this year, but the vast majority of investors preferred to keep their funds in the fund.

The situation reflects a serious divide in the hedge fund industry: most of them still face a lack of capital — investors have withdrawn nearly $70 billion over the past five years, while a small group has received a huge inflow of funds. This select group now fears that managing too large an amount of assets will harm profits. Staff shortages, leverage restrictions, and a war for traders also impose serious constraints on the growth potential of the largest funds.

With large funds closed to new inflows, less large hedge funds have a chance to increase assets. It is worth noting that many smaller funds offer investors more transparent conditions, high liquidity, and often lower fees.

Most Popular Hedge Funds Don’t Want Your Money But Smaller Firms Might

Bloomberg, 30 January 2025 Nishant Kumar

American activists increase pressure on British companies

In 2024, activist investors from the US became even more active in targeting British companies. According to the Activist Alert Outlook report from Alvarez & Marsal (A&M), 42% of all activist campaigns in Europe were directed against UK firms — 59 firms came under pressure during the year. At the same time, American funds initiated 40% of such campaigns, a record high in the last five years.

André Medeiros, managing director of A&M in the EMEA region, explained: 'Amid record valuations in the domestic market, American activists are increasingly turning their attention to Europe, especially the UK, in search of undervalued assets. British companies lag behind their global competitors in terms of gross profit, cash flow generation, and return on capital, which is reflected in significant discounts on their stock prices.'

It is noted that in 23 events launched by American funds against British companies in 2024, activists have become less likely to use public pressure methods, preferring to negotiate with the board of directors behind closed doors. Although changes in leadership composition remain the main goal of activists, there are increasingly calls for operational and strategic reforms to improve profitability, while demands in the field of ecology and social responsibility have decreased.

According to A&M analysts' forecasts, in 2025, amid persistently low valuations, the activity of investors aiming to increase stock value will continue to grow. It is also noted that up to 141 companies across Europe, 49 of which are based in the UK, may be targeted by activists this year.

US activist investors ramp up attacks on UK companies

City AM, 6 January 2025 Elliot Gulliver-Needham

Hedge funds ramp up hiring of doctors and scientists to analyze the pharmaceutical sector

Major hedge funds, such as Balyasny, D.E. Shaw, Point72, Schonfeld, Qube, and Squarepoint, managing a total of over $200 billion, are actively hiring doctors and scientists to gain expert opinions on the prospects of pharmaceutical companies, which is especially relevant amid sharp stock fluctuations in the sector.

In 2024, pharmaceutical companies showed significant volatility. For example, Abbvie's shares fell by 11% after the failure of clinical trials for a schizophrenia treatment, while shares of its competitor Bristol Myers Squibb rose by almost 13%. Novo Nordisk shares jumped more than 7% after the publication of quarterly results, which noted better-than-expected sales of the weight-loss drug Wegovy.

Hedge funds, known for actively investing to gain a technological or research advantage, have turned their attention to opportunities in the pharmaceutical sector. Some of the largest multi-strategy hedge funds are now hiring doctors and medical research specialists worldwide.

Hedge funds have long used specialists with technical knowledge, hiring, for example, geologists and engineers to analyze commodity markets. The largest players also use meteorologists to track weather changes to make decisions based on the obtained data when trading in the energy market. Now the focus is shifting to medicine.

Research and development spending in the pharmaceutical industry is expected to increase as borrowing costs decrease in the economy as a whole. 'The prospect of lower interest rates encourages multi-strategy hedge funds to hire healthcare specialists more actively,' noted Freddie Stacy, co-founder of the recruitment company Sheridan Executive. 'After the approval of the COVID-19 vaccine, the hiring of medical specialists and scientists for work in hedge funds has become especially active in the US. Over the past six months, this trend has spread to Europe and intensified thanks to advances in artificial intelligence, which helps make discoveries in the pharmaceutical industry,' he added.

'From a corporate culture perspective, doctors can fit well into the work of hedge funds,' noted Stacy. 'Former doctors are attractive because if you can handle the extreme stressful situations that medical professionals face every day, you can certainly withstand drawdowns on the trading floor. Hedge funds need people with perseverance, determination.'

Big hedge funds call on doctors, scientists for an edge on pharma

Reuters, 4 December 2024 Nell Mackenzie

Global hedge funds expand presence in Hong Kong

Three global hedge funds — American Hudson Bay Capital Management, British Sona Asset Management, and New York-based Centiva Capital — have joined the list of funds opening offices in Hong Kong, strengthening the city's status as a regional financial center.

Hudson Bay Capital Management, based in Stamford, Connecticut, and managing about $20 billion, registered its Hong Kong division in early October. The Hong Kong office will be its seventh office worldwide and the first in Asia. Sona Asset Management, managing $10.1 billion and specializing in credit strategies in Europe, opened a Hong Kong division in August 2024. The firm plans to staff it both by transferring experienced employees and hiring new specialists. New York's Centiva Capital received a license to operate in Hong Kong in late November, marking a logical continuation of its expansion in Asia after entering the Singapore market three years ago.

Local regulators and government officials are trying to revive Hong Kong's status as a regional financial center. Previously, Hong Kong faced an outflow of financial professionals amid the pandemic, increased geopolitical tensions, pressure from mainland China, and a slowdown in its economy. Meanwhile, the influx of new personnel significantly decreased.

Gradually, Hong Kong is recovering from a strong outflow of talent, and the number of licensed financial professionals has reached a record level. From June to October 2024, the city saw a net increase of approximately 830 licensed financial workers, bringing their number to a record 42,000 in October.

According to the Securities and Futures Commission (SFC), the growth in the number of licensed specialists can be explained by 'improved market conditions and various measures to support the asset management sector.' 'There is also a significant increase in the number of hedge fund managers, private equity funds, and family offices in Hong Kong,' a representative of the SFC stated.

Hudson Bay Among Three More Hedge Funds Expanding to Hong Kong

Bloomberg, 16 January 2025 Bei Hu, Nishant Kumar and Julia Fioretti

Hong Kong Finance Jobs Rebound to Record After Talent Drain

Bloomberg, 12 November 2024 Jinshan Hong and Nazmul Ahasan

Notable Companies

Founder of Hindenburg Research closes the firm

Nathan Anderson, founder of Hindenburg Research, announced the closure of the company, known for its exposé reports that had a significant impact on the market value of large companies.

Founded in 2017, Hindenburg Research specialized in conducting deep investigations into company activities, uncovering cases of accounting manipulation, fraud, and violations of corporate governance norms. The published reports often led to a sharp decline in the stock value of these companies, and Hindenburg Research profited by taking short positions against them.

Anderson explained his decision to close the company due to the high emotional and physical burden associated with constant investigations. 'Today I am ending this chapter. The work has become so all-encompassing that I began to miss other aspects of life,' he noted. According to him, the closure is not related to any external threats or personal issues.

Over the years, Hindenburg Research conducted a number of high-profile campaigns that left a noticeable mark on the history of financial markets. One of the most sensational exposés was the report against India's Adani Group in 2023. In this report, the company was accused of improper use of offshore tax havens and lack of transparency, leading to the stock value of Gautam Adani's companies dropping by $119.4 billion (about 50% of their market capitalization) from January 24, 2023, when the report was published, to February 2 of the same year. The Hindenburg Research report also prompted further investigations by regulatory authorities.

Another notable campaign was the attack on the American electric truck manufacturer Nikola. In 2020, Hindenburg Research published a report claiming that the company misled investors about its technological capabilities. One of the key arguments was the exposure of a video showing an electric truck allegedly speeding at high speed, while in reality, the vehicle was simply rolling down a steep hill. This case became a vivid example of a successful short sale and led to a lawsuit against the founder of Nikola.

It is important to note that Hindenburg Research always operated exclusively with its own funds, not managing others' assets. This model allowed it to maintain independence in choosing investigation targets. After the publication of reports, many investors also took short positions, often leading to significant market value adjustments for companies.

In the next six months, Anderson plans to publish a series of materials and videos detailing the methodology of Hindenburg Research's investigations, making his experience accessible to anyone interested in financial investigation methods.

Hindenburg founder to close short-seller behind Adani, Nikola selloffs

Reuters, 15 January 2025 Carolina Mandl, Pritam Biswas and Savyata Mishra

Adani losses top $100 billion in the wake of Hindenburg Research report

CNBC, 2 February 2023 Ruxandra Iordache

Said Haidar's fund experiences the worst period in its history

In 2024, the Haidar Jupiter macro fund lost 32.7%, continuing the decline of 2023, when losses amounted to 43.3%. The last two years have been the worst in the fund's history. As of the end of November 2024, assets under management decreased to $818 million, whereas two years ago they amounted to nearly $5 billion. This decline occurred due to significant investment losses and massive withdrawals by investors.

Fund manager Said Haidar is known for his strategy based on betting on global economic shifts using high leverage. Previously, his strategy allowed for impressive results — a 193% increase in 2022 and nearly 70% in 2021. While most hedge funds today strive for stable returns to meet the needs of conservative clients, such as pension funds, Haidar focuses on higher returns accompanied by significant volatility.

In the latest investor newsletter, Haidar noted that the 2024 losses were mainly related to unsuccessful operations in the bond and commodity markets. The losses left Haidar behind some of his peers also betting on global events. For example, Robert Citrone's Discovery Capital Management fund grew by 52% last year, and Zach Schreiber's PointState Capital fund by 47.9%.

According to Bloomberg calculations, to cover the accumulated losses over two years, Said Haidar's fund needs to grow by 160%.

Haidar’s Hedge Fund Loses 33% With Assets Plunging by $4 Billion

Bloomberg, 7 January 2025 Nishant Kumar

Nouriel Roubini launches ETF to protect against economic risks

Renowned economist Nouriel Roubini, nicknamed 'Dr. Doom' for his gloomy forecasts, launched a new exchange-traded fund (ETF) Atlas America Fund on November 20, 2024. Its strategy is aimed at protecting investors from price instability and potential economic shocks, especially in the event of a second presidential term for Donald Trump.

The fund will invest in Treasury Inflation-Protected Securities (TIPS), gold, real estate investment trusts (REITs), and agricultural commodities. This approach will allow hedging risks associated with potential protectionist measures, including import tariffs. Roubini believes that the traditional 60/40 portfolio, consisting of stocks and bonds, may not meet investors' expectations amid growing threats to the global economy.

The economist warns of potential volatility growth in the event of trade barriers and stricter immigration policies, which could lead to stagflation — a combination of high inflation and weak economic growth. According to him, in conditions of increasing government debt and rising interest rates, traditional safe assets, such as Treasury bonds, may lose their appeal.

The Atlas America Fund became the first ETF launched by Atlas Capital Team, co-founded by Roubini. Its expenses will amount to 0.75%. According to the economist, historical testing of the strategy showed that it provides higher returns compared to bonds, while its volatility is lower than that of stocks.

An economist known as 'Dr. Doom' has launched an ETF designed to protect against Trump risks

Business Insider, 21 November 2024 Filip De Mott