Some hedge funds face steep losses after betting on hot sectors

Some hedge funds face steep losses after betting on hot sectors

The broader S&P 500 index ended around flat for May, with the Nasdaq index down 2%. However, during the month the S&P fell so far it nearly hit bear market territory. For the year to date, the S&P is down 12% and the Nasdaq down 21%.

Tiger Global, one of the industry's biggest firms, lost 14% in May, leaving it down 52% for the year, an investor said. The firm has lost money every month this year after slipping 7% in 2021.

Similarly, RTW Investments, one of the industry's hottest biotech funds, told investors that performance estimates for its RTW Flagship Fund including designated investments show the portfolio losing 9.51% in May. For the year, it has fallen 34.5%.

Life sciences and biopharma hedge fund Perceptive Advisors lost 19.4% in May, leaving the fund down 41.5% for the year following double digit losses in 2021, according to an investor update.

For many fund managers the damage began long before May when former market darlings reported unexpectedly poor returns. Netflix in April said it lost subscribers for the first time in a decade, sending its share price tumbling 35% in one day.

Billionaire investor William Ackman, who banked three years of very strong returns, was caught