Whitney Hedge Fund Pares 2014 Losses to 4.7% With June Gain

Jul 01, 2014 6:08 pm ET

(Updates with industry performance in third paragraph.)

July 1 (Bloomberg) -- Meredith Whitney, the former Wall Street analyst who started a hedge fund with backing from British billionaire Michael Platt, lost 4.7 percent this year in her fund, according to an investor letter.

Whitney’s American Revival Fund LP, which started in November with about $50 million, posted a 1.7 percent gain in June, ending five months of losses, according to the letter sent today from her New York firm Kenbelle Capital LP. The fund is down 1 percent since inception.

Whitney, who seeks to profit from what she predicts will be the next cycle of growth in “America’s Heartland,” said she repositioned her holdings in late May toward regional financial companies, according to the letter. Her fund has trailed hedge funds on average, which gained 1.4 percent through May, as well as the 7.1 percent return for U.S. stocks through June.

Kenbelle’s profits last month came from investments in industries including finance, energy and transportation, according to the letter. Whitney said her fund was about 20 percent net long. Net exposure is calculated by subtracting the percentage of a hedge fund’s bets on falling securities, from its long holdings, or wagers on rising stocks and bonds.

Whitney didn’t immediately return a message seeking comment.

Trade Ideas

Whitney gained fame for correctly predicting Citigroup Inc.’s dividend cut in 2008. Two years later she said the U.S. would see municipal-bond defaults totaling hundreds of billions of dollars, a forecast that didn’t materialize. She later told Bloomberg News it had been “a guesstimate” involving “fifth- derivative dimensions.” Last year, she closed her brokerage unit, Meredith Whitney Securities LLC, after three unprofitable years.

Whitney told potential investors at a conference in New York last year that she started her hedge-fund firm in part because she was tired of other people profiting from her trade ideas, a person who attended the event said in November.

In addition to backing from Platt, Kenbelle also attracted money from partners at Platt’s hedge-fund firm BlueCrest Capital Management LLP, according to a fund presentation.