Blackstone’s Senfina hedge fund suffers 15% fall
Blackstone’s new hedge fund, its crown jewel last year, has fallen more than 15 per cent in value since January, showing how some of the industry’s stars have been wrongfooted by market swings.
The multi-strategy fund Senfina, which means “everlasting” in Esperanto, launched in 2014 and achieved returns of about 20 per cent last year, according to documents seen by the Financial Times. After deeper losses in the trading turmoil of January and February, the fund regained some ground during the market rally in March.
Just three months ago, Blackstone chief executive Steve Schwarzman called Senfina “the real star” of its hedge fund business.
“We could almost fill an unlimited amount of that,” he said on a call in January.
Senfina’s losses are deeper than most of its peers: a broad index of hedge fund performance compiled by Hedge Fund Research fell 0.7 per cent in the first quarter. Many managers got caught in a strong sell-off in the first six weeks of the year then rode a sharp rally in the next six weeks, but a few high-profile funds suffered more painful losses, including Pershing Square and Glenview.
Declines are casting a new light on the multi-strategy approach that won over so many investors last year, in which a central command structure oversees investment managers pursuing diverse trading strategies. Because of their size and investing style, bigger multi-strategy funds can use their relationships with banks to borrow more and amplify their returns.
Clients clamoured to invest with established names such as Millennium and Citadel last year as their multi-strategy funds outperformed. The demand attracted newer models including Senfina and Folger Hill, which is run by the former chief operating officer of SAC Capital.
Clients expecting volatility liked that the funds’ strategies were “market neutral”, and therefore not dependent on the direction of any one market, and with Senfina any concerns about risk management were allayed by the imprimatur of Blackstone, the world’s largest alternative asset manager.
Millennium and Citadel lost about 4.2 per cent and 6 per cent respectively in the first quarter, while Dmitry Balyasny’s $5.3bn Atlas Enhanced Fund had declined about 4.7 per cent by April 8, said people with knowledge of the situation. Millennium and Citadel declined to comment and a representative for Mr Balyasny did not reply to a request for comment.
“It’s been a tough go for most so far this year,” said Troy Gayeski, partner at the fund of hedge funds SkyBridge Capital, citing the market’s violent swings.
“It is a less-than-subtle reminder that leverage cuts both ways,” he said. “Sometimes being market neutral isn’t as helpful as it is in other times. You’re mitigating losses, but remember, you’re levered, so the leverage is what causes you to de-risk at sometimes the wrong time.”
Senfina, made up of 12 portfolios, has about $2bn under management, with a central book made up of the managers’ “best ideas”.
Despite the losses, Blackstone is still investing in the unit: Vineet Bedi has just joined from Guggenheim, and another new manager is expected to start soon.
Blackstone declined to comment.