The hedge fund market is filled with twists and turns. No one knows that better than Charles Botchway, the CEO of the Chicago-based investment firm, Madison Street Capital. Madison Street Capital focuses on the merger and acquisition sector of the financial industry, and 2015 was a good year for the firm. Madison Street Capital closed 42 hedge fund deals in 2015, and that’s 10 better than the 32 deals that were closed in 2014. The good news about those 42 deals is, the 42 deals represent a 27 percent increase in assets under management. Even though the hedge fund industry only averaged a little more than a 3% return in 2015, activist hedge funds had returns of more than 6.8 percent.
Activist hedge funds are the funds that push companies to make changes like buying back shares and spinning off unproductive divisions. In 2014, activist hedge funds didn’t perform that well, according to Mr. Botchway. The overall return that activist hedge funds received in 2014 was 5%, The S&P 500 returned 12.5 percent in 2014, so hedge fund investing isn’t always the best way to make money.
Hedge funds are having a tough time in 2016, according to Anthony Marsala, one of the co-founders of Madison Street Capital. The uncertainty that surrounds China’s economic growth and the recent developments in the UK and the European Union are making things difficult for many hedge fund managers. China’s search engine, Baidu, is now tracking China’s economy, so the economic figures that come from the second largest economy in the world aren’t adjusted by the Chinese government. Most hedge fund managers believe China’s gross domestic product output is much less than the government reported. Hedge fund managers depend on accurate information, and China is notorious for releasing information that is less than accurate.
According to an article published by PR.com, 2016 will still be a decent year for hedge funds even though a record number of funds have closed. More consolidations and partnerships are in the works in 2016, according to PR.com. But Madison Street Capital continues to do what the firm has always done. Madison Street has its own niche in the $100 to $500 million mergers and acquisition category. Madison Street plays an important role in portfolio valuation, merger and acquisition advisement, financial restructuring, financial sponsor coverage, and capital introduction for hedge funds and other investment advisors.
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