Ainslie, Einhorn, Stock Hedge Funds Post Record Drops

Maverick Capital Ltd., Greenlight Capital LLC and The Children's Investment Fund Management LLP fell more than 12 percent in September as stock hedge funds posted record monthly losses and braced for client defections.

Lee Ainslie's Maverick Capital declined 19.5 percent and Greenlight Capital, run by David Einhorn, was down 12.8 percent, according to investors in the New York-based funds. Children's Investment, overseen by Chris Hohn in London, fell 15 percent, based on a preliminary estimate.

Stock hedge funds fell an average of 8.6 percent in September, the biggest one-month loss since Hedge Fund Research Inc. began collecting data in 1990. While that was better than the 12 percent decline by the MSCI World Index, a benchmark for global stocks, industry analysts expect investors to increase their requests to pull money from funds.

``The poor performance of certain hedge funds will have repercussions in the allocation processes,'' said Taco Sieburgh Sjoerdsma, head of research at Liability Solutions Ltd., a London-based investment consultant. ``It may lead to substantial shifts between hedge-funds strategies and between hedge funds.''

Other managers with above-average losses for the month included Stephen Mandel, whose main Lone Cypress fund in Greenwich, Connecticut, fell 14.7 percent. New York-based Third Point LLC, run by Daniel Loeb, dropped 11 percent.

Officials for the hedge funds declined to comment or didn't return calls.

Defense Doesn't Work

Funds in all investment categories fell 6.9 percent in September, according to Hedge Fund Research's Global Hedge Fund Index. That's the worst month for the $1.9 trillion industry since August 1998, when the Russian debt default triggered the collapse of Long-Term Capital Management LP.

The losses came even as many managers sought to sidestep the tumble in equity prices by holding more cash, cutting borrowing and reducing their bets on stocks expected to rise.

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