Rio Hedge Fund Adam Stung by Selloff in Worst Month Since Launch

(Bloomberg) -- One of Brazil's best-known hedge funds saw an unprecedented rout last month, bucking gains for peers amid the selloff in U.S. stocks.

Adam Capital's flagship fund Adam Macro II FIC fund slumped 7.3% in April, the biggest monthly decline since it was launched by veteran investor Marcio Appel in 2016. That compares to a 1.4% gain for a basket of local peers and a 0.8% increase for the CDI benchmark rated used by the industry, according to data compiled by Bloomberg.

“Our portfolio suffered with the magnitude of the correction, as well as the loss of correlation between some asset classes,” the fund wrote in a monthly note this week. “A reduction in some positions was needed.”

Adam, which is based in Rio de Janeiro, didn't say which trades contributed most to losses, but a note published in early April mentioned it had wagers both in the U.S. and Brazil stocks. Appel recently said in a podcast that he owned a basket of U.S. stocks, including cloud computing firms. The position was partly hedged by a short in the S&P 500 Index.

Adam declined to comment beyond the monthly note.

The S&P 500 saw its biggest monthly drop since the onset of the pandemic in April, hurt by underwhelming guidance from large tech firms and with the Federal Reserve on track to deliver its biggest rate hike since 2000. The tech-heavy Nasdaq 100 Index was also hammered, falling the most since 2008.

The asset manager oversees over 8 billion reais ($1.6 billion) and was founded in 2016 by Appel and Andre Salgado, industry veterans from Banco Safra SA and Banco Santander's Brazilian unit. The firm quickly became one of the country's largest independent hedge-fund managers, but struggled with redemptions last year amid waning appetite for riskier products.