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December 26, 2006
Distressed Securities Does it Again
The distressed securities subsector of the hedge fund business just turned in the best performance of 2006, putting up a 15.5% number. That was impressive, but comes following similar outperformance in the preceding three years. Remarkable stuff.NET % YTD 52-WK
CLOSE* CHG CHG % CHG % CHG
Convertible Arbitrage 130.95 -0.09 -0.07 10.3 10.4
Merger Arbitrage 123.83 -0.16 -0.13 9.0 9.1
Event Driven 141.39 0.06 0.04 12.4 12.5
Distressed Securities 174.89 -0.01 -0.01 14.8 15.5
Equity Market Neutral 108.77 -0.06 -0.06 7.1 7.2
Equity Long/Short 113.80 -0.21 -0.18 7.7 7.2
*Estimates as of 12/22/06, after fees.
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For comparison, approx figures for:
S&P 500: +14.5%
MSCI EAFE: +22%
NASDAQ: +7.2%
DJIA: +16.5%
DJ .REIT Index: +34%
Or: the three "A"s did well. The big story of 2006 was Autos, Auto Parts and Airlines, there was not much to distressed this year.
This moment seems like a great time to be an optimist (though being optimistic about emerging markets was a better bet). Wonder how long it lasts?