Hedge Fund Return Question?

C

chaykapwr

I have a hedge fund question that I have been thinking about for a little bit.

Say you have a 20+ billion dollar hedge (i.e. where size is not an issue) and you start buying into stock ABC after a downtrend. Lets say it trades at $80 a share, with average daily volume of 5 -7million shares with a market cap of 50-75 billion. Lets say you add on 10 million shares.

What type of return do hedge funds look for before they will consider to exit? For example, one of my strategy is a short term where I will buy these type of stocks to pocket a 15% move in a couple of days/weeks, can a hedge fun with that many shares afford to do this? Or will the slippage on entering and exiting cause the 15% gain to diminish to only say 5%? Can hedge funds exit such huge positions with ease, or do they have to have returns of 25%+ to even consider taking the position for short term investments?
 
Quote from chaykapwr:

I have a hedge fund question that I have been thinking about for a little bit.

Say you have a 20+ billion dollar hedge (i.e. where size is not an issue) and you start buying into stock ABC after a downtrend. Lets say it trades at $80 a share, with average daily volume of 5 -7million shares with a market cap of 50-75 billion. Lets say you add on 10 million shares.

What type of return do hedge funds look for before they will consider to exit? For example, one of my strategy is a short term where I will buy these type of stocks to pocket a 15% move in a couple of days/weeks, can a hedge fun with that many shares afford to do this? Or will the slippage on entering and exiting cause the 15% gain to diminish to only say 5%? Can hedge funds exit such huge positions with ease, or do they have to have returns of 25%+ to even consider taking the position for short term investments?
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$80 per share x 10 million shares = 800million dollars. A hedge fund worth 20billion, probably wouldn't put 4% of their assets into 1 stock. Also, the type of short term trading you're talking about would never fly with a hedge fund, unless they have ample liquidity. The type of liquidity you won't find in any one stock. That type of strategy may work with more liquid assets, but even then i doubt many hedge funds would take that route. It's much more difficult to get out of a billion dollar position than it is a 100k position, even in liquid assets. The time horizons just dont mesh.

Currency markets, bond markets, etc., are the most liquid, but i doubt even here a hedge fund would base its strategy on trading such short term trends. When you have 20b under management, you have to play the swings where it may take days to build a position and then to liquidate one.

I'm not talking from experience as i've never ran a 20b hedge fund so take it for what it's worth.
 
Quote from plyka:

$80 per share x 10 million shares = 800million dollars. A hedge fund worth 20billion, probably wouldn't put 4% of their assets into 1 stock. Also, the type of short term trading you're talking about would never fly with a hedge fund, unless they have ample liquidity. The type of liquidity you won't find in any one stock. That type of strategy may work with more liquid assets, but even then i doubt many hedge funds would take that route. It's much more difficult to get out of a billion dollar position than it is a 100k position, even in liquid assets. The time horizons just dont mesh.

Currency markets, bond markets, etc., are the most liquid, but i doubt even here a hedge fund would base its strategy on trading such short term trends. When you have 20b under management, you have to play the swings where it may take days to build a position and then to liquidate one.

I'm not talking from experience as i've never ran a 20b hedge fund so take it for what it's worth.
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Thats what I assumed .

I think the only real option is the currency market where you can push that type of order without really affecting the market (100million +)
 
You could search online for 20+ billion dollar hedge fund names, write down the names, start a new search for form 13f filings for each of those funds, this will give you quarterly long holdings for the fund, from here you could see the sizes and names of the stocks they hold, also could put a few quarterly holdings together and see how the positions change, some websites might even do it for you and for free, this will not give you the complete picture, but still give some ideas and some answers to your questions
 
Quote from antaram:

You could search online for 20+ billion dollar hedge fund names, write down the names, start a new search for form 13f filings for each of those funds, this will give you quarterly long holdings for the fund, from here you could see the sizes and names of the stocks they hold, also could put a few quarterly holdings together and see how the positions change, some websites might even do it for you and for free, this will not give you the complete picture, but still give some ideas and some answers to your questions
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I have done that, but the problem is a lot can happen from quarter to quarter. And when a hedge fund closes out positions in a quarter, there is no way to know how long it took them to do it.

Appreciate the answers/advice.
 
Use whalewisdom.com to study how big hedge funds trade. I've noticed they frequently hold positions for months. But yes if you see a position appear one quarter and disappear the next, then that trade could have been held anywhere from 1 day to 3 months.

I wish I could see short positions in those filings. Anyone know how I can get info like that?
 
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