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Billionaire trader Michael Hintze suffered a record 45% loss in his flagship fund in just 2 months

Sir Michael Hintze
  • Hedge-fund billionaire Sir Michael Hintze stomached a record 45% loss at his flagship fund in March and April, according to Bloomberg.
  • The CQS Directional Opportunities Fund's loss dwarfed hedge funds' average decline of 4.6% for the two-month period, Bloomberg said, citing Hedge Fund Research data.
  • CQS had to sell investments at a fraction of their face value to raise cash during the pandemic, Bloomberg reported.
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Billionaire trader Sir Michael Hintze suffered a record 45% loss in his flagship fund as several of his bets soured due to the coronavirus pandemic.
The Hintze-managed CQS Directional Opportunities Fund shed about 33% of its value in March and another 17% in April, according to Bloomberg.
The fund's decline dwarfed hedge funds' average loss of 4.6% in the two-month period, Bloomberg said, citing Hedge Fund Research data. Its underperformance is particularly surprising as it has returned triple the industry average since launching in 2005, Bloomberg added.
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CQS ran into trouble after the COVID-19 crisis led to business closures, supply-chain disruptions, and stay-at-home orders. Hintze's main strategies — distressed, asset-backed, equities, and volatility strategies — lost money, he told clients in a letter viewed by Bloomberg.
The firm also suffered from its exposure to energy, the Financial Times reported. The industry was shaken when oil prices tumbled into negative territory in April.
Moreover, CQS had to sell assets to satisfy creditors' collateral requirements after the pandemic raised insurance risks, sources told Bloomberg. It flogged a bunch of collateralized debt obligations in April for roughly a fifth of their face value to raise cash, the sources added.
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Overall, CQS' assets shrunk by $3 billion to $16 billion, and that figure could fall further if clients withdraw their cash in the coming months, Bloomberg said.
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