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Money managers under the microscope

Merrion profits from UK housing malaise

November 8, 2010

October may have been a strong month for markets (and therefore, by implication it seems these days, for hedge funds), but that hasn’t stopped some short-sellers from profiting.

Mike Nicol, manager of the Merrion European Absolute Return hedge fund, says he did well out of new short positions in housebuilders Barratt Developments  and Taylor Wimpey. Both fell around 21 percent during the month, while the FTSE 100 rose 2.2 percent.

“The UK housing market continues to struggle and we believe that this malaise will continue for some time,” says Nicol.

HFRX’s short bias index is down 17.4 percent so far this year while the average hedge fund is up nearly 6 percent to end-September, according to Dow Jones Credit Suisse (and probably more after October) compared with the FTSE 100′s 8 percent gain. At least Merrion’s update indicates hedge funds don’t have to be limited by overall market movements.

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