Hedgeweek Features

Hedge funds delivered an average return of 10.12% in 2024, with volatility five times lower than that of the MSCI World index — which climbed 19.22% — and generated 2.62% of alpha compared to none in 2023, according to the 2025 Hedge Fund Outlook report from BNP Paribas.

The report, based on a survey of 229 allocators managing or advising on approximately $1.4tn in hedge fund assets, provides an in-depth look at market sentiment and strategic shifts within the industry as investors increasingly chase alpha.

Over a three-year horizon, average hedge fund returns stood at 6.14%, closely tracking the MSCI World’s 6.88% return, but with significantly lower volatility and a beta of just 0.12, according to the report.

Ashley Wilson, Global Head of Prime Services at BNP Paribas, highlighted the growing role of separately managed accounts (SMAs) in driving asset growth. “The rise in allocations to separately managed accounts, driven by multi-managers and institutional allocators, will continue to be a key driver in asset growth this year,” Wilson said. “Multi-managers aim to generate platform alpha, while institutional allocators prioritise greater transparency and capital efficiency.”

Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, pointed to the improved performance of hedge fund strategies. “Hedge fund alpha increased in 2024, prompting more allocators to deploy capital across both fundamental and quantitative strategies for the year ahead,” he noted, underscoring a shift toward strategies that deliver tangible value despite their cost.

The report also reveals significant shifts in geographic allocation. The Asia Pacific region emerges as the most attractive market for 2025, with more than a quarter of respondents planning net additions — a stark contrast to just 2% in the previous year. Japan remains a key focus, with 20% of investors expecting net inflows, while a rebound is anticipated in China after years of capital outflows.

Sector preferences are also evolving. Equity long/short funds, particularly those focused on the Americas, have topped performance charts for a second consecutive year, displacing credit as the most sought-after strategy. Interest in event-driven strategies, meanwhile, more than doubled, with a quarter of investors looking to increase allocations compared to 11% in 2024. Additionally, portable alpha and active extension strategies are gaining traction, with a significant portion of investors planning to boost their current exposures or venture into these areas for the first time.

The survey findings also shed light on the growing influence of SMAs in hedge fund portfolios. Currently used by 26% of respondents, SMAs now account for 36% — or $185bn — of hedge fund assets. Meanwhile, private banks and wealth management firms, though traditionally representing a smaller slice of hedge fund allocations at an average of 4%, are set to expand their positions. These firms plan to add $14bn to their hedge fund exposure in 2025, up from $12bn in 2024, and intend to increase the number of new managers on their rosters.

Hedge fund investors are increasingly seeing their returns whittled away by the controversial ‘passthrough fee’ structure that allows firms to pass along nearly any expense, according to a report by Bloomberg.

As an example, the report highlights Balyasny’s flagship hedge fund, Balyasny Atlas Enhanced, which in 2023, generated a gross return of 15.2%, although after fees, investors were left with just a 2.8% gain.

These passthrough fees totalled over $768m for the year, covering costs ranging from employee compensation to office supplies and mobile phone services, and have become a hallmark of multi-strategy hedge funds including Citadel, Millennium Management, Point72 Asset Management, and ExodusPoint Capital Management, as well as Balyasny. Together, these five firms oversee more than $200bn in assets.

In Balyasny’s case, $670m — or 87% of the fees — went toward employee compensation and benefits, while other costs included recruiting, professional services, and travel expenses.

While critics argue that these fees can be excessive, others, see them as a trade-off for more consistent returns.

Multi-strats rely on these fees to attract top talent, invest in advanced technologies, and maintain flexibility in evolving markets. Firms say the structure helps reduce risk and improve performance, but the cost to investors is significant.

Bloomberg’s analysis shows that the list of eligible passthrough expenses among major multi-strats has grown by nearly 40% since 2018. While early disclosures focused on basic costs like rent and computers, today’s filings include items like artificial intelligence tools, severance payments, and even private jet bookings.

For example, Citadel’s recent filings detail passthrough costs that include employee gifts, snacks, and first-class travel. Between 2022 and September 2024, Citadel’s three largest funds charged $12.5bn in passthrough fees, with $11bn allocated to employee compensation.

ExodusPoint has taken a different approach by listing specific expenses it will not charge to investors, such as artwork. Still, firms like Point72 openly state in filings that there is “no limit” on the amount of passthrough expenses they can charge.

The impact on returns is stark. Multi-strats retained an average of 59% of every dollar they earned in 2023, up from 46% two years prior, according to BNP Paribas. This surpasses the traditional “2-and-20” fee model, where firms take 2% of assets under management and 20% of profits. For example, in 2023, ExodusPoint delivered an 11% gross return but charged 8.4% in passthrough fees, leaving investors with just over half of the gains. Similarly, Balyasny’s investors received only 18% of the fund’s gross returns after fees.

Despite the controversy, many investors remain loyal to multi-strats, betting on their ability to deliver steady annual returns of 12% or more with minimal downswings. The firms have avoided negative years in the past half-decade, a track record that appeals to clients seeking stability.

Bloomberg’s analysis used Form ADV Part 2 brochures that investment firms, including hedge funds, are required to submit annually to the SEC. The forms contain descriptions of a firm’s advisory businesses, investment strategies and fee structures.

The analysis focused on five of the biggest multistrategy hedge funds that have disclosed their passthrough fee structures since 2018, although research from Goldman Sachs shows that 80% of such firms have some sort of passthrough structure.

The rapid rise of multi-manager hedge funds could pose significant risks to financial stability due to correlated activity and their aggressive risk management practices, according to a report by Bloomberg citing comments from Bank of England (BoE) Governor Andrew Bailey.

The report cites Bailey as saying at the University of Chicago Booth School of Business in London on Tuesday, that combined, these factors could exacerbate market instability during times of stress.

While multi-manager hedge funds, also known as multi-strats or pod shops, have attracted the majority of hedge fund investment flows in recent times by promising steady, diversified returns Bailey cautioned that their structure, with traders organised into distinct strategies or pods, could amplify market disruptions.

“Multi-manager funds can make individual ‘pods’ deleverage rapidly in stress conditions, which can exaggerate market moves,” Bailey said. “There could be circumstances in which the means by which multi-manager funds protect themselves in this respect can create risks to the system.”

Responding to questions after his speech, Bailey also pointed to challenges stemming from the growth of non-bank financial institutions, including hedge funds. He noted that the scale of expansion in this sector is straining the capacity of prime brokerage. This area has grown increasingly concentrated, raising further concerns in the wake of events like the Archegos collapse.

While the multi-manager model provides benefits through its “sophisticated umbrella risk management” that mitigates fund-level concentration risks, Bailey warned that similar strategies pursued by different multi-manager funds could lead to systemic correlation.

Bailey’s remarks though have drawn criticism from the Managed Funds Association (MFA), which represents the alternative asset management industry, including hedge funds.

In a statement, Jillien Flores, the MFA’s Head of Global Government Affairs, said: “The structure of hedge funds enhances financial stability, as hedge funds have no government backstop, no liquidity mismatch, and losses are siloed to an individual fund and its sophisticated investors. Regulators have visibility into the activity of hedge funds through existing regulatory reporting and the funds’ broker-dealer counterparties. Through these channels regulators can monitor for risks to the financial system.”

Appaloosa Management, the hedge fund firm founded by David Tepper, significantly increased its stakes in China-related stocks and exchange-traded funds (ETFs) last quarter, ahead of the recent AI-fuelled rally in the country’s equity markets, according to a report by Bloomberg.

The report cites a regulatory filing made on Monday as revealing that Tepper, who made headlines in September by urging investors to buy “everything” tied to China, expanded Appaloosa’s holding in e-commerce giant JD.com by approximately 43% during the fourth quarter. He also increased the fund’s stake in Alibaba Group Holding by 18%, cementing it as the firm’s largest holding, accounting for 16% of its $6.4bn portfolio.

These moves came during a turbulent period for Chinese equities, marked by wavering investor sentiment. Following Beijing’s stimulus efforts in late September, Chinese stocks initially surged but lost momentum in subsequent months due to concerns over limited fiscal measures, a sluggish economic recovery, and ongoing property sector challenges. During the fourth quarter, Alibaba’s stock fell 20%, while JD.com dropped 13%.

In addition to increasing stakes in JD.com and Alibaba, Tepper expanded exposure to other China-focused assets, including the KraneShares CSI China Internet ETF, the iShares China Large-Cap ETF, and individual companies such as Baidu and KE Holdings. By the end of December, Chinese stocks and ETFs accounted for 37% of Appaloosa’s portfolio by market value, largely unchanged from the previous quarter.

Tepper declined to comment on the investments.

China’s equity markets have shown renewed strength early this year, with some benchmarks outperforming their US and European counterparts. The surge has been fuelled in part by the success of DeepSeek’s artificial intelligence model, which has enhanced the country’s standing in the global AI race and drawn investor attention back to Chinese tech firms.

The Hang Seng Tech Index, which includes many of China’s leading tech firms, entered a bull market last week, while the Hang Seng China Enterprises Index is nearing its October peak. Alibaba, which is working on its own AI initiatives, has seen its stock rise nearly 30% since the start of the year. Analysts believe Alibaba’s more diverse international operations may help it weather potential revenue disruptions from the ongoing US-China trade tensions better than its domestic peers.

US activist hedge fund Whitebox Advisors has intensified its opposition to the debt restructuring plan proposed by Austrian motorcycle maker KTM AG, accusing the company of employing “delaying tactics” to sideline its alternative proposal, according to a report by Bloomberg.

The dispute comes as creditors prepare to vote on KTM’s plan on 25 February, a critical step for the company following its insolvency filing in November.

Whitebox, a creditor holding KTM’s Schuldschein promissory notes, has presented a competing restructuring proposal promising at least a 45% recovery rate for lenders, significantly higher than the 30% outlined in KTM’s plan. The hedge fund’s proposal includes an option for lenders to provide fresh financing and invites existing shareholders to participate in a capital increase. Additionally, Whitebox claims to have interest from potential equity investors willing to inject capital if current shareholders decline to participate.

In contrast, KTM’s restructuring plan relies solely on its parent company, Pierer Mobility, to raise €900m ($930m) to stabilise the business.

Whitebox has criticised KTM for failing to engage in negotiations or respond to requests for information, accusing the company of delaying tactics to avoid addressing the alternative plan. In a letter sent to KTM’s management and seen by Bloomberg, Whitebox urged the company to consider its proposal, which it claims offers a more favourable outcome for creditors.

Without meaningful engagement, Whitebox plans to vote against KTM’s restructuring proposal. A rejection could push the motorcycle manufacturer into liquidation or a different insolvency process where the debtor loses control.

The hedge fund has been rallying support among other Schuldschein lenders, asserting that it has the backing of a “large” number of investors. Whitebox’s efforts are separate from those of another lender group advised by Houlihan Lokey.

Global hedge funds are increasingly buying Chinese stocks, with the pace accelerating significantly in early February, fuelled by the emergence of DeepSeek, a homegrown Chinese artificial intelligence startup, according to a report by Reuters.

The report cites a client note from Goldman Sachs referencing data up to 7 February as highlighting that Chinese equities, both onshore and offshore, are the “most notionally net bought market” on its prime brokerage book globally. The week of 3-7 February marked the strongest hedge fund buying activity in over four months, the report added.

The buying spree has been largely concentrated in single stocks, particularly within sectors such as consumer discretionary, information technology, industrials, and communication services.

Energy, utilities, and real estate stocks, meanwhile, saw outflows as hedge funds reallocated to higher-growth sectors in China.

The rise of DeepSeek, an innovative low-cost AI platform, has been a pivotal in reshaping global investor sentiment toward Chinese assets, with the startup’s success prompting a reevaluation of China’s role in the global AI landscape.

The sentiment has been further bolstered by Beijing’s policy-easing measures and relief over US President Donald Trump’s decision to impose a lower-than-expected 10% additional tariff on Chinese goods.

The MSCI China index has risen for four consecutive weeks since mid-January, gaining over 6% in February alone, outperforming major global markets.

Hedge funds allocations to Chinese equities now represents 7.6% of Goldman Sachs’ total prime book exposure, ranking in the 23rd percentile over the past five years, up from around the 10th percentile in January.

Proxy advisory firm Glass Lewis has thrown its support behind all three director nominees proposed by activist hedge fund Barington Capital in its campaign to shake up the board at Matthews International’s board, according to a report by Reuters.

Glass Lewis cited the need for “positive changes” at the coffin and memorial products company, which has faced extended periods of underperformance.

The reports cites Glass Lewis as saying in a report released Sunday and seen by Reuters, that Matthews’s 11-member board requires fresh perspectives to address its “protracted underperformance.” The company’s stock has declined 24% over the past five years, closing at $26.55 on Friday.

Barington Capital, which owns nearly 2% of Matthews’s shares, has nominated three candidates, including its founder James Mitarotonda, to the board. Glass Lewis praised the proposed nominees, describing them as “a reasonable, credible, and incremental slate of candidates” who could offer a more effective roadmap than the current board.

The activist hedge fund has called for a new strategy to improve Matthews’ financial performance, including a search for a replacement for longtime CEO Joseph Bartolacci and potential divestments of underperforming assets.

Glass Lewis’s endorsement follows similar recommendations from two other proxy advisory firms, which guide institutional investors on voting decisions in corporate elections.

Matthews, though, has found some support among shareholders, with GAMCO Asset Management, which owns 4.39% of the company, announcing last month that it would back the company’s nominees for now, while also warning it might propose governance changes next year if progress isn’t made.

Commodities expert Luke Sadrian has parted company with Rokos Capital Management after a serving as a Partner and Investment Officer for two years and four months at Chris Rokos’s London-headquartered hedge fund firm, according to a report by Financial News London.

Sadrian, who joined Rokos in November 2022 from discretionary commodities manager Commodities world Capital (CWC) where he held the position of Chief Investment Officer since 2016, traded metals during his time at the hedge fund.

Prior to CWC, Sadrian served as CIO and Managing Partner at Sadrian Bowman Capital, and as a Portfolio Manager at
Moore Capital Management, according to antis LinkedIn profile having also worked at Brevan Howard in London as a Commodities Portfolio Manager.

Activist hedge fund Saba Capital Management, led by Boaz Weinstein, has escalated its campaign targeting underperforming UK investment trusts, signalling a broader push to reform the sector, according to a report by Reuters.

The report cites Weinstein as revealing plans to call general meetings for four trusts to propose transitioning them from closed-ended structures to open-ended ones.

Speaking at a London School of Economics conference on Monday, Weinstein criticised the performance of seven UK investment trusts, describing their results as ranging from “underwhelming” to “disastrous.” He now aims to overhaul four of these trusts — CQS Natural Resources Growth & Income PLC, European Smaller Companies Trust PLC, Middlefield Canadian Income, and Schroder UK Mid Cap Fund — by advocating for an open-ended structure.

“If investors want to stay in the investment trust, good for them, but investors should have the option,” Weinstein said, emphasising the need for greater flexibility in how shares are issued and redeemed.

Weinstein’s campaign has faced resistance from both shareholders and trust managers. Six of the seven targeted trusts have already voted against Saba’s initial proposals, which ranged from investor buyouts to board overhauls. The final trust, Edinburgh Worldwide, is set to vote on Friday.

The Trusts have pushed back against Saba’s actions, calling the campaign opportunistic and not in the best interests of broader shareholders. Richard Stone, Chief Executive of the Association of Investment Companies (AIC), on Monday highlighted Saba’s shift in strategy but called for more specifics on how the proposed structural changes would benefit investors.

The foreign exchange (FX) market, long overshadowed by equities and bonds, is witnessing a resurgence in trading activity as heightened volatility stemming from a second Donald Trump presidency boosts potential profits, according to a report by Bloomberg.

For hedge funds, which once largely sidelined forex trading, the $7.5tn-a-day market is becoming a lucrative arena again. Activity has surged across major and emerging market currencies, particularly in Asia, with trading volumes in some regions reaching record highs since the 2024 US election, according to Citigroup.

Hedge funds are increasingly turning to currency trading to capitalise on sudden price swings. While many forex-focused funds disappeared during the era of ultralow interest rates and synchronised monetary policy, those that survived are now attracting fresh capital, according to data from BarclayHedge.

“The market has shifted, and hedge funds are moving back into FX,” says Kevin Rodgers, former head of Deutsche Bank’s global currency desk. “It’s reminiscent of the financial crisis when currency trading was at its peak.”

For hedge funds, the return of volatility presents an opportunity to profit from short-term bets on exchange rates. This trend has prompted banks and trading firms to rebuild their FX capabilities. Citigroup, for instance, has expanded its currency derivatives teams in London and Singapore, while Wells Fargo recently hired a veteran from Deutsche Bank to lead its currency options team.

The surge in hedge fund involvement is also reviving hiring in the FX market. Recruitment firms report increased demand for traders with experience navigating volatile markets, particularly those who worked during the 2008 financial crisis.

“Many desks had been downsized or replaced by algorithms in recent years,” says Adam Gazzoli, co-founder of London-based recruitment firm Adamis Principle. “But the renewed appetite for FX trading is driving banks to seek experienced talent who can bring a human element to the trade.”

Beyond hedge funds, asset managers are also increasingly incorporating FX strategies into portfolios, with Fredrik Repton of Neuberger Berman noting that: “FX has been a sleeping giant, but we’re emphasising it because of its ability to add value during volatility.”

January marked the busiest month for currency options trading since February 2020, with daily volumes surging 75% compared to the previous year, according to CME Group. Coalition Greenwich forecasts two years of revenue growth for forex trading in developed markets, even as other asset classes, such as sovereign bonds and commodities, face declines.

Optiver Holding BV, a top trading firm in London, reflects the broader enthusiasm. The firm has seen its average daily forex volumes double since 2024 and has switched to 24-hour operations to meet rising demand. “FX was often the quietest corner of the trading floor,” says Tim Brooks, who oversees Optiver’s forex options desk. “Now there’s more price movement and a lot more interest coming in.”

Hedge funds began 2025 on a positive note, recording gains in a volatile January shaped by political transitions and turmoil in the technology sector. The HFRI Fund Weighted Composite Index climbed 1.4%, while the HFRI Equity Hedge Index led the charge at 2.1%.

Additionally, the HFR Cryptocurrency Index added 0.36%, buoyed by optimism surrounding cryptocurrency under the new administration.

The inauguration of Donald Trump as US President brought sweeping policy changes, with executive orders impacting areas such as immigration, trade, energy, and federal spending. Meanwhile, intense competition in the artificial intelligence sector, spurred by Chinese startup Deepseek, drove fluctuations in technology markets.

The month’s political landscape and economic policies created a challenging yet opportunistic environment for hedge fund managers. Directional Equity Hedge strategies were the standout performers, benefitting from market swings tied to both policy and technology developments. Sub-strategy highlights included a 3.6% gain for the HFRI Equity Hedge: Multi-Strategy Index and a 2.8% increase for the HFRI Equity Hedge: Fundamental Value Index.

The broader hedge fund space also saw significant gains from Macro and Event-Driven strategies. The HFRI Macro (Total) Index rose 1.0%, while the HFRI Event-Driven Index advanced 0.9%, reflecting increased expectations for mergers and acquisitions under the new administration.

Fixed income strategies, including interest rate-sensitive plays, extended their strong performance streak. The HFRI Relative Value (Total) Index posted its 15th consecutive monthly gain, advancing 0.8%, led by the HFRI Relative Value: FI-Convertible Arbitrage Index’s 1.3% rise.

Performance dispersion among hedge funds tightened in January, with the top decile of HFRI constituents gaining an average of 7.9%, while the bottom decile declined by 4.1%. This marks a contraction from December’s 13.2% top-to-bottom spread. Over the trailing 12 months, the top decile gained an impressive 41.4%, while the bottom decile fell 9.9%.

Notably, nearly 80% of hedge funds reported positive performance in January, underscoring the sector’s resilience amid market turbulence.

Hedge Fund Research (HFR) expanded its index offerings in January, introducing liquidity-specific indices across its HFRI, HFRI 500, and HFRI 400 families. These indices are aimed at providing investors with benchmarks that better reflect liquidity characteristics, separating funds offering monthly or more frequent liquidity from those with less frequent redemption options.

“Despite the volatility, hedge funds delivered broad-based gains, led by Equity Hedge strategies capitalising on both Fundamental and Quantitative opportunities,” said HFR President Kenneth J Heinz. “Shifting geopolitical risks, inflation concerns, and competition in AI-driven technology continue to create a dynamic environment. Managers have been preparing for these shifts since the US election and are well-positioned to capitalise on accelerating policy changes in the months ahead.”

Hedge funds and other market participants could consider relocating US Treasury trading offshore or utilising alternative strategies to avoid compliance with the upcoming US Treasury clearing mandate, according to a report by Risk.net citing a new academic paper by Yesha Yadav and Joshua Younger.

The mandate, set to take effect at the end of the year for cash Treasury trades and six months later for repo transactions, will require in-scope entities to clear these trades through the Fixed Income Clearing Corporation (FICC). However, the paper highlights concerns over potential evasion tactics, particularly by hedge funds domiciled in jurisdictions like the Cayman Islands.

The paper points out that more than half of hedge funds reporting to the US Securities and Exchange Commission (SEC) are based offshore, particularly in the Cayman Islands. These offshore entities could theoretically execute repo trades with non-US entities that are not FICC members, avoiding the mandate’s requirements.

“Regulators face the risk that frequent participants in the Treasury market decide to move their activities to foreign shores and into non-US entities precisely to have the option to avoid the effect of the mandate,” Yadav and Younger wrote.

Despite this, such trades could still fall within the scope of the mandate if offshore entities engage with counterparties tied to FICC members. The SEC is expected to provide further clarification on the mandate’s scope and potential exemptions later this month.

Yadav, a professor at Vanderbilt Law School, highlights the grey area in US securities law surrounding the mandate. Historically, US law has limited the SEC’s jurisdiction over bond trades between non-US entities, even when trading US instruments, as established by the 2010 Supreme Court ruling in Morrison v National Australia Bank.

“There is a question first and foremost about the reach of this mandate to counterparties abroad,” Yadav explained.

The US does have broad extraterritorial jurisdiction in criminal matters, such as cases involving money laundering or market manipulation. However, such authority requires allegations of criminal conduct.

The paper explores other potential workarounds for market participants seeking to bypass the clearing mandate, including that trades could be restructured as “economically similar” securities lending transactions rather than Treasury repo deals, potentially avoiding clearing requirements.

In addition, repo agreements without fixed maturity dates may fall outside the scope of the mandate, while bilateral repos between two non-dealer counterparties are exempt from the SEC rule, even if a bank guarantees the trade’s settlement.

Despite the theoretical avenues for avoidance, the paper suggests the economic benefits of evading the mandate may not justify the effort. Hedge funds often rely on FICC clearing members for repo transactions, and dealers typically prefer to clear repos due to the capital and risk-weighted asset benefits of sponsored cleared repo transactions.

Elliott Management, the activist hedge fund known for its aggressive investment strategies, has taken a stake in BP, signalling potential pressure on the UK oil giant to reevaluate its strategy amid ongoing financial performance struggles, according to a report by Bloomberg.

The report cites unnamed sources as confirming the stake without disclosing its exact size.

Shares in BP jumped to the top of the FTSE 100 on Monday morning, putting on 7% in early deals as the markets digested news of Elliot’s position in the business.

Elliott, which manages $70bn in assets, has recently shifted its focus toward making larger bets on fewer companies, amplifying its influence in situations such as BP, where shares have underperformed. Over the past year, BP’s stock has fallen nearly 9%, compared to a 6.5% rise for rival Shell, with the company coming under fire for its high debt levels, lack of strategic clarity, and underwhelming financial performance.

Elliott’s involvement raises speculation about potential shifts in BP’s direction. The hedge fund could push for BP to refocus on its core oil and gas business, moving away from its extensive green energy initiatives. Some investors have even suggested that Elliott might advocate for a breakup of the company or a retrenchment from weaker segments of its business.

Elliott’s move comes amid broader dissatisfaction among investors, with some describing BP’s board as having a “muddled strategy” and being “asleep at the wheel.”

BP, led by CEO Murray Auchincloss, has been navigating significant headwinds. The company downgraded its fourth-quarter profit guidance due to weak refining margins, with analysts slashing consensus earnings estimates by 35%. BP also recently announced plans to reduce its 90,000-strong workforce by 5% and cut contractor numbers by 3,000 as part of a $2bn cost-cutting initiative.

In addition, BP has paused or stopped 30 projects since June, streamlined its business operations, and put its German refinery and petrochemical complex in Gelsenkirchen up for sale. The company spun off its offshore wind assets into a joint venture with Japan’s Jera last year to ease its debt burden.

Despite these efforts, investor confidence remains low. Analysts have warned that BP is likely to reduce its planned $1.75bn share buyback program, further dampening market sentiment.

Elliott, led in Europe by Gordon Singer, has a history of pushing for strategic overhauls and boardroom changes at major companies. Recent successes include backing a plan to streamline UK-listed conglomerate Smiths Group and forcing a split of US industrial giant Honeywell just three months into its activist campaign.

Activist hedge fund firm Pershing Square has acquired a $2.3bn stake in Uber with founder Bill Ackman calling the ride-hailing firm “one of the best-managed and highest-quality businesses in the world,” according to a report by the Financial Times.

The announcement comes as Uber pivots toward new opportunities in autonomous vehicles and seeks to build on its recent streak of profitability.

Ackman revealed the investment after Uber reported weaker-than-expected fourth-quarter earnings, emphasising the company’s potential for long-term growth, particularly in the emerging autonomous vehicle sector, which he described as a “$1tn-plus opportunity.”

Uber’s shares rose 6.6% on Friday following Ackman’s disclosure, pushing the company’s market capitalisation to nearly $160bn, with Ackman expressinf confidence in that valuation, stating that its stock remains undervalued.

“We believe Uber is still trading at a massive discount to its intrinsic value,” Ackman wrote on X (formerly Twitter). “This combination of exceptional management, high quality, and undervaluation is extremely rare, especially for a large-cap company.”

While both Uber and Pershing Square declined to comment further, Ackman credited CEO Dara Khosrowshahi with steering the company toward profitability after years of turbulence under co-founder Travis Kalanick.

Uber reported its first-ever annual operating profit in February 2023, marking a pivotal moment for the company, which had faced challenges since its public debut in 2019. The IPO failed to meet lofty expectations of a $120bn valuation and became infamous for the largest first-day dollar loss for a US company.

Since taking the reins in 2017, Khosrowshahi has focused on tightening operations and streamlining the business, a shift that Ackman lauded in his announcement.

The report cites Ackman as also revealing that Pershing Square began acquiring Uber stock in January and now holds more than 30 million shares, although his relationship with the company dates back to its founding in 2009, when he made an initial investment through a venture capital fund.

President Donald Trump has revived calls to eliminate the carried interest tax deduction, a longstanding benefit cherished by hedge fund managers and private equity executives, according to a report by Bloomberg.

The report cites White House press secretary Karoline Leavitt as confirming on Thursday that the president is making the repeal of this tax break a priority in his broader tax reform agenda.

Speaking after a meeting with Republican lawmakers, Leavitt stated: “The president is committed to working with Congress to close the carried interest tax deduction loophole.” This measure, if implemented, would target the ability hedge fund managers and private equity fund managers to pay lower capital gains tax rates on their earnings, potentially reshaping the landscape of investment management taxation.

The carried interest loophole allows investment managers to classify their earnings as capital gains rather than regular income. This means they pay a 23.8% tax rate instead of higher rates that can reach nearly 40% for ordinary wages. The provision has been a flashpoint for critics who argue it unfairly benefits wealthy asset managers, including hedge funds and private equity firms.

Financial markets reacted swiftly to the news, with shares of private equity giants such as Apollo, KKR, and Blackstone falling on the announcement. These firms, along with the hedge fund industry, are expected to ramp up lobbying efforts to protect the tax break, which they argue supports long-term investments.

Drew Maloney, President of the American Investment Council, defended the status quo, stating that the current tax framework “struck the right balance” during the 2017 Tax Cuts and Jobs Act, which made only minor adjustments to carried interest rules. Maloney urged lawmakers to “keep this sound tax policy in place and unleash more long-term investment.”

However, the push to eliminate carried interest has garnered bipartisan support in the past, and Trump’s renewed focus on the issue could draw backing from Democrats. A new bill targeting carried interest was introduced on Thursday by Democratic Senator Tammy Baldwin and Representatives Marie Gluesenkamp Perez and Don Beyer, potentially building momentum for change.

Trump’s latest stance contrasts with his previous track record. During his 2016 campaign, he pledged to repeal carried interest but later softened his position, leaving the loophole largely intact in the 2017 tax overhaul.

In addition to targeting carried interest, Leavitt revealed that Trump wants to address other tax breaks, including those benefiting sports team owners and adjustments to the state and local tax (SALT) deduction.

Saba Capital has suffered another setback in its campaign to remove the boards of seven investment trusts with shareholders of Janus Henderson’s European Smaller Companies Trust (ESCT) decisively voting to back the existing board, according to a report by Daily Business.

The vote, which marks Saba’s sixth defeat in its ongoing battle for change at seven UK investment trusts, saw Saba’s proposals gain just an additional 0.5% of votes cast. Overall, 62.1% of those voting rejected Saba’s resolutions, with turnout once again robust at 76.86%.

James Williams, chair of Janus Henderson’s European Smaller Companies Trust, welcomed the result, describing it as a “clear and complete rejection of Saba’s proposals.”

He added, “Today’s vote is a resounding endorsement of ESCT’s proven investment strategy, the quality of its independent board, and the manager’s ability to deliver outperformance.”

Saba’s campaign is set to conclude with a final general meeting on 14 February, when shareholders of the Baillie Gifford-managed Edinburgh Worldwide trust will cast their votes.

This latest loss follows a series of setbacks for Saba. Over the past week, the hedge fund failed to secure shareholder support to oust the boards of CQS Natural Resources Growth & Income, Henderson Opportunities, Baillie Gifford US Growth, and Keystone Positive Change trusts. The campaign began with an initial defeat at Herald Investment Trust.

Rostro Group, a diversified fintech and financial services company serving hedge funds, broker-dealers, and other commercial institutions, has appointed Saul Knapp to the newly created post of Managing Director, Futures and Options.

Based in London, Knapp will also continue in his role as Rostro’s Chief Risk Officer.

Rostro’s new Futures and Options division has been established as the company continues to expand its product offering and reflects the growing demand for new asset classes. Direct Market Access will be provided through partnerships with the well renowned order management system providers TT and CQG, enabling clients to access thousands of new contracts from exchange operators including The CME Group, ICE, and Eurex.

Knapp began his financial career working on the LIFFE floor as an independent derivatives trader in the 1990s, before taking up a series of risk and trading roles for London-based brokerages and trading houses.

Said Haidar’s macro trading hedge fund, Haidar Jupiter, delivered a 15.8% gain in January, marking its best performance since June 2023 and offering investors a moment of relief following an extended period of steep losses, according to a report by Bloomberg.

The fund’s recent surge follows a brutal two-year stretch during which it plummeted by 62%, its worst-ever run since launching more than two decades ago. Despite the January rally, the fund would need to generate an additional 126% in returns to recover those losses.

A spokesperson for Haidar Capital Management declined to comment on the fund’s recent performance.

Haidar Jupiter is known for its aggressive, highly leveraged bets that can lead to dramatic double-digit gains — or equally sharp losses. This high-risk, high-reward approach sets it apart in an industry increasingly focused on steady, lower-risk returns for institutional investors such as pension funds.

“This fund is not for the faint-hearted,” remarked one client following the January results, acknowledging the stress of receiving monthly updates over the past two years.
The hedge fund has seen wild swings in performance since 2020, with two years of record gains followed by two years of devastating losses. Its assets under management dropped to under $750m by the end of 2024, down from almost $5bn at its peak two years earlier.

While the specific drivers of the fund’s January gains remain unclear, investor letters revealed that equities, fixed income, and commodities were its largest allocations during the month — the same asset classes that accounted for most of its losses in 2024.

Fir Tree Partners, a New York-based activist hedge fund firm with an almost 30-year track record of campaigns targeting distressed companies, is returning external capital to investors, according to a report by Bloomberg.

The report cites a letter sent to investors as confirming that Fir Tree, which was founded in 1994 by Jeffrey Tannenbaum, plans to return approximately 95% of the capital within its Credit Opportunity Fund by early March, with the remaining funds to be returned following a final audit. The firm’s PAMLI Global Credit Convexity business, however, will be handed over to a new investment manager and will continue its operations.

A representative for Fir Tree declined to comment on the matter.

Fir Tree’s flagship credit fund posted a net gain of around 17% last year, up from 13% in 2023, as outlined in the letter. Over its 30-year history, the hedge fund has achieved several key milestones, including challenging banks over mortgage underwriting practices following the 2008 financial crisis and founding sPower, which later became the largest private solar utility in the US.

More recently, Fir Tree has been involved in several high-profile investments. In 2022, the fund made a short bet against the crypto stablecoin tether and has been actively involved in the fortunes of two struggling Swedish companies, Samhallsbyggnadsbolaget i Norden AB (SBB) and Intrum AB.

Citadel has provided an unusual look into the performance of its largest multi-strategy funds, revealing an impressive $57bn in gains during a period of significant profitability for the firm, the most lucrative hedge fund business in history, according to a report by the Business Times.

As part of its $1bn bond offering this week, Ken Griffin’s firm was required to produce a prospectus for potential investors, and while it does not provide a comprehensive overview of Citadel, the document does offer financial results for its three largest funds, covering nearly four years from the start of 2021 through September 2024.

These three funds — Wellington, Kensington, and Kensington II — began 2021 with $23.6bn in assets. Over the period, they generated $56.8bn in gains, with investors netting $30bn after management and performance fees of $7.5bn and pass-through expenses of $17bn, the majority of which was allocated to employee compensation.

Together, the three funds made up approximately 80% of the $65bn Citadel managed at the start of 2025. The Wellington fund, which dates back to 1990, returned 19.5% from its inception through December. Since 2018, Citadel has paid out $18bn in voluntary distributions to its investors.

Citadel declined to comment on the details of the prospectus.

As of the start of this year, around 61% of the assets in Citadel’s multi-strategy funds were sourced from institutional investors, including sovereign wealth funds, pensions, and endowments. Citadel principals and employees, who are subject to the same fees and expenses as other investors, made up 18%. Family offices and funds of funds, meanwhile, represented 12% and 9%, respectively.

Despite a slight decline in net income for the nine months ending 30 September compared to the previous year, Citadel reported that all of its strategies delivered positive net trading revenues, driven by strong performances in equities, natural gas, power in commodities, and fundamental credit and convertibles.