Nell McKenzie and Anusha Sakui
LONDON (Reuters) – Hedge fund managers betting on mergers and acquisitions outperformed those pursuing other strategies with a 7.7% return in the first five months of 2024, Goldman Sachs said in a note to clients, as deal volume recovered .
While Goldman did not provide year-ago data for comparison, prime brokerage Barclays noted at the time that such fund managers returned negative 0.8% on investments from January to May 2023 as high interest rates limited the number of trades.
While there has been a resurgence this year as companies gain confidence from lower interest rates and a stabilizing economic backdrop, global dealmaking has yet to return to 2021’s record levels.
Global M&A activity totaled $1.3 trillion in the first five months of 2024, up 23% from the same period in 2023 but below the $1.8 trillion recorded in January-May, according to LSEG. 2022.
U.S.-focused mergers and acquisitions accounted for 56% of total global mergers and acquisitions this year, the highest share since 1998, according to LSEG.
The deals included consumer bank Capital One’s $35.3 billion bid for credit card issuer Discover Financial Services (NYSE:) in February and ConocoPhillips’ $22.5 billion bid for Marathon oil (NYSE:) in May.
Hedge funds typically earned about a 7% return on investment through the end of May, according to Goldman Sachs. Hedge funds that traded the stock gained 7.4%, helping lift the group’s average.
Hedge funds, which bet on the relative price of two assets, performed the worst, gaining about 5% for the year, the bank said.