Within the world of investing are hedge funds and they are here to stay, although many funds did not beat the indexes, which cost less to invest in. The hedge funds selling premise is they will beat the indexes with their ability to leverage their trading strategies. Sometimes it works wonderfully, sometimes not so well.
One of the higher profile managers is William Ackman who runs Pershing Square Capital Management. In an article by Svea Herbst-Bayliss of Reuters, Mr. Ackman told his investors in 2018 he was going to spend greater amount of time on research.
Last year, the fund returned a 58.1% return making it the best hedge fund return according to Hedge Fund Research. In 2015 and 2016, he had losses, in 2017 and 2018 he had smaller losses and in 2019 he was worth the investment. Currently he has $7.4 billion under administration.
The biggest gains came from Chipotle Mexican Grill which under a new CEO was up 72%. Other stocks such as Starbucks was up 40% and ADP was up as changes to the company were made.
When hedge funds bet the index, investors are happier to pay the fees, but if they do less than the index, why not buy the index?
Linking to dividend paying stocks, trying to invest in profitable stocks which pay dividends should not be the highest return, but the risk level is among the lowest levels. In 2019, the companies and index were up about 20%, with low risk that seems to me, that is good and worth trying again in 2020 and beyond.
There are more questions than answers, till the next time – to raising questions.