For Investors, May Looks to Be Cruel Month

It's shaping up to be a really bad month for a host of big-name fund managers, including Citadel, Diamondback Capital, SAC Capital, Third Point and Viking Global.

Across the industry, hedge fund operators tallied significant losses for the first three weeks of May amid plunging stock and commodity prices. The market was unsettled by the "flash crash" of May 6, Europe's sovereign-debt crisis and the prospect of a military conflict in Korea. The only fund managers to emerge unscathed: dedicated short-sellers.

As one investor put it: "A lot of guys are long and wrong in this environment."

One of the biggest decliners of the month so far was Eddie Lampert's ESL Investments, down a whopping 15%. Through April of this year, the fund had shown a gain of 22.7%.

According to investors, the roster of prominent managers whose funds are down significantly this month also includes:

*Cevian Capital, a Stockholm manager that was off 10% for the first three weeks of May.

*Citadel, whose flagship Wellington and Kensington funds each fell 2% through May 20, putting them down about 2.9% for the year.

*Credit Suisse Hedging-Griffo, a multi-billion-dollar global-macro manager that posted month-to-date losses of 5-6% through May 21.

*Diamondback, whose offshore and onshore vehicles fell 3.8% and are now up just 0.2% for the year.

*Israel "Izzy" Englander's Millennium Management, whose flagship fund was down 1.5 % through May 20, following a 5% gain through April.

*Paulson & Co., whose Credit Opportunities Fund fell 2% following a 9.8% gain for the first four months of the year.

*Steve Cohen's SAC Capital International Fund, which lost 2.9%, leaving it up 4% for the year.

*Shumway Capital, whose SCP Sakkonet Fund was down about 10% after gaining 4.3% through April.

*Chris Hohn's TCI, a London firm whose TCI Master Fund was off 9%, following a 2.5% gain through April.

*Dan Loeb's Third Point, whose Qualified fund lost 4.5% through May 19. Its year-to-date return still stood at an impressive 13.8%.

*Viking, whose Global Equities Fund lost 4.2%, leaving it down 3.5% for the year.

Some investors suggested that the results from the blue-chip firms won't look so bad once the May numbers are fully reported. Indeed, many other managers have kept their performance numbers close to the vest - possibly out of reluctance to share bad news. Meanwhile, convertible-bond-arbitrage managers have been hurt by a substantial jump in high-yield bond spreads tied to the Greek debt crisis and regulatory uncertainty in Washington. One example: Whitebox Advisors' Whitebox Concentrated Convertible Arbitrage Fund was down 5.9% for the month through May 21.

Commodity-trading funds also have suffered. Global Advisors, a managed-futures firm headed by Rus Newton, reported that its Global Commodities Systematic Fund was down 10.3% for the first three weeks of May. During the same period, the Barclays BTOP50 Index, which tracks the managed-futures industry, fell 2.3%.

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