HEDGE fund managers making bets on mergers and acquisitions (M&A) outperformed those deploying other strategies with a return of 7.7 per cent in the first five months of 2024, Goldman Sachs said in a note to clients, as deal-making rebounded.
Although Goldman Sachs did not offer a year-earlier figure for comparison, Barclays prime brokerage noted at the time that such fund managers had returned a negative 0.8 per cent on investment from January to May 2023, as high interest rates curtailed deal-making.
While seeing a resurgence this year as companies gain confidence from declining interest rates and a stabilising economic backdrop, global deal-making has yet to return to 2021‘s record levels.
Worldwide M&A was worth US$1.3 trillion during the first five months of 2024, a 23 per cent increase versus the same period in 2023, but below the US$1.8 trillion recorded in January to May 2022, based on LSEG data.
According to LSEG, US-targeted M&A has accounted for 56 per cent of overall global M&A this year, the highest year-to-date share since 1998.
Deals have included consumer bank Capital One’s US$35.3 billion bid for credit card issuer Discover Financial Services in February, and ConocoPhillips’ US$22.5 billion offer for Marathon Oil in May.
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Hedge funds generally averaged around a 7 per cent return on investment to end-May inclusive, Goldman Sachs said. Stock-trading hedge funds returned 7.4 per cent, helping to lift the average of the group.
Hedge funds that bet on the relative price of two assets performed the least strongly, returning about 5 per cent for the year, said the bank. REUTERS
