RAB Energy tops hedge funds in 2010

January 4, 2011: 9:00 AM ET

Hedge funds won't announce their final numbers for a few weeks yet, but investors already have some idea of the year's big winners and losers.

HSBC gives us a sneak peek with its latest weekly report on the hedge funds tracked by its alternative investment group – a broad array of investing styles and well-known fund managers.

According to the copy obtained by Fortune, 2010's top performing fund so far is RAB Energy, a global long/short equity fund that specializes in the energy sector. The $225 million fund is up 42.9% through December 22, 2010, according to HSBC. Most performance data in the report was through the third week of December.

Managed by Gavin Wilson and Mark Redway, RAB Energy was among the top five performers in 2009 as well. Before joining RAB Capital, Wilson was an oil sales director at Canaccord Capital, and Redway was an oil and gas analyst at Canaccord.

Tulip Trend Fund clocked in at number two, up 38.8% through December 24. Tulip Trend is a managed futures fund with $619 million in assets under management.

Rounding out the top five were Henderson European ABS Return, up 34.8% through December 17; Moore Emerging Equity, up 31.7% through December 16; and Daniel Loeb's Third Point Offshore, up 31.5% through December 21, according to HSBC.

While his returns may not be as huge as HSBC's top performers, hedge fund giant John Paulson still had a good year. He may have raked in a plus-$1 billion payday, the Daily Mail reports, estimating that the hedge fund giant returned about 21% for the year.

The returns by the top managers may sound impressive during a year when the S&P 500 climbed 13%, but they pale in comparison to the top winners in 2009, and even to those during the tumultuous 2008. In 2009, the best performer was Senvest Partners with a 222% return, according to HSBC. Indeed, the top 20 funds that year all clocked in better numbers than 2010's winner with a 42.9% return. In 2008, seven managers bested this year's winner.

The flip side is the losers weren't quite as disastrous in 2010. In the red was Artradis Barracuda, a $195 million multi-strategy fund. It was down 16.7% through December 24, making it HSBC's biggest dud.

Artradis was followed by Phil Falcone's $3 billion Harbinger Capital Partners. Falcone's bad year is no secret, and according to HSBC his fund is down 13.9% through the end of November, compared to the fund's peer group, which returned 8.8% on average.

Falcone has subjected investors to roller coaster performance, returning more than 100% by shorting subprime in 2007 (the strategy that also put Paulson on the map), and then losing about 22% in 2008, according to Reuters. The wire service says he was up 46% in 2009.

Lately, Harbinger has been hit by high profile redemptions and litigation. But the manager, who is as well known for his high profile social life as he is for his investment in the New York Times, seems undaunted. He's placing a big bet on technology with an attempt to build his own 4G wireless broadband network that could be among this year's biggest grand slams or disappointing flops.

Update: An earlier version of this story incorrectly stated that RAB Energy was a $92 million fund, as reported by HSBC. It's actually a $225 million fund.

Also on Fortune.com:

For hedge funds, nowhere to go but up

From analyst to hedge fund founder in six years

The big hubbub over St. Joe Company

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Katie Benner
Katie Benner
Writer, Fortune

Katie Benner joined Fortune in October 2006. As a writer for the magazine and the website, she focuses on Wall Street and the economy. Prior to joining Fortune, Benner worked at TheStreet.com, CNNMoney, and as a freelancer in Beijing for China International Business, the South China Morning Post, and as a columnist for Beijing Review. She has a B.A. in English from Bowdoin College.

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