The multibillion dollar Haidar Jupiter fund has lost 50% of its assets in 2023. The macro hedge fund made bad bets on bonds and other securities, magnified with borrowed money.
From a new report in Institutional Investor:
Haidar Jupiter Fund all but assured it will finish the year deep in the red when it suffered an 18.11 percent loss in November.
The heavily leveraged macro fund is now down about 50 percent heading into the final month of the year, making it one of the year’s worst-performing hedge funds.
While the exact amount of losses is not publicly disclosed, they likely total around $2 billion. The fund had $4.3 billion in assets as of October 2022, according to Bloomberg.
A Turbulent Macro Environment
Rapid fluctuations in Treasuries and interest rate expectations caught many macro funds by surprise this year. Ten year Treasury yields have fallen from 5% to less than 4.2% in under two months.
Haidar’s fund has been prone to wild swings in the past. It saw huge gains last year, but has lost much of that capital in 2023.
The fund’s heavy use of borrowed money magnifies its gains, but also its losses.
I’m skeptical of leverage. Borrowed money makes your wins and losses bigger — but it doesn’t make you a better investor.
What’s more, it only takes one really terrible year to put you out of the game, for good.
Can Haidar Recover?
Haidar has notched some amazing returns in the past. His only other down year in the last decade was 2015, with a 21% loss.
His highly leveraged bets could lead to another giant gain in 2024. But will his investors wait that long?
When investors see you fall by half, they assume you can go down all the way. And once they start thinking that way, they only care about one thing: getting their money out.
This can cause a spiral of withdrawals, forcing you to sell positions for whatever you can get. Losses deepen, and the withdrawals escalate.
Wrap-Up
Haidar may make another gutsy bet and win back its losses. But as long as the fund continues to pile on leverage, it will be walking a tightrope.
What do you think will happen to Haidar? Leave a comment and let us know!
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