Weekly update

Reddit shares tumble 15% as hedge fund predicts slump

Reddit's stock took a big hit, marking its largest single day drop since it first started trading. This happened after Hedgeye Risk Management suggested it's a good idea to bet against Reddit's stock, saying it's worth about half of what it's currently valued at according to new reports.

At one point during the latest trading session, Reddit's shares fell by as much as 15%, reaching their lowest level since March 22. Reddit shares, traded under the symbol RDDT, have been doing really well since their initial public offering (IPO) on March 21. On the first day of trading, the stock shot up by 48%, starting at $34 per share. In the first few days of trading, Reddit's shares soared by over 90%, reaching a peak of $65.11. However, Hedgeye believes that the stock is way overvalued and should be closer to its IPO price of $34, indicating a potential 50% drop.

Emerging markets hedge fund capital gains led by AI and cryptocurrency

Emerging Markets hedge funds continued their strong performance from last year into 2024. This was fuelled by hopes of lower inflation and interest rates, as well as a better global economy. These gains were largely driven by investments in new technologies like AI and cryptocurrencies. Hedge funds that focused on cryptocurrencies in emerging markets saw a big boost, with the HFR Cryptocurrency Index rising by 25.6% in the year through February.

Despite geopolitical tensions, hedge funds in emerging markets and Asia did well in 2023 and early 2024. They benefited from a brighter global outlook and investments in cryptocurrency and AI. This positive trend persisted even amid concerns about energy, commodity, and supply chain disruptions. Kenneth J. Heinz, president of HFR, noted that despite ongoing risks, institutions and investors worldwide are likely to increase their investments in specialized hedge funds focusing on emerging markets and cryptocurrencies. These funds have shown resilience in the face of market volatility.

Digital assets funds flip to record weekly outflows

Digital asset investment products experienced a big change last week. After seven weeks of record inflows totalling $12.3 billion, they suddenly saw a record outflow of $942 million, according to a new report. In the US, new ETF issuers attracted $1.1 billion in investments. However, this was partly balanced by a significant outflow of $2 billion from Greyscale, a major player in the market.

Despite this, other cryptocurrencies did well. They saw a combined net inflow of $16 million, with notable contributions from polkadot ($5 million), avalanche ($2.9 million), and litecoin ($2 million).

Andurand’s Hedge Fund Rebounds 20% After Record Loss Last Year

Pierre Andurand's risky hedge fund, the Andurand Commodities Discretionary Enhanced hedge fund, is making a comeback. After a huge 55% loss in 2023, it's now up by 20% this year, according to Bloomberg.

The fund, which doesn't have set limits on risk, suffered major losses last year due to bets on rising oil prices gone wrong. This prompted Andurand Capital Management, which managed about $1 billion at the end of last year, to reduce the fund's risks. But this year, things are looking up. Factors like conflicts in the Middle East, damage to energy infrastructure in Russia by Ukraine, and increased global demand have caused oil prices to rise by about 14%, leading to gains for the fund.