2017 was a good year for Britain's richest financiers, with the top 13 in the industry adding more than £1 billion to their cumulative wealth as the good times continued to roll in the global markets.

But who is the richest hedge funder in the UK? The Sunday Times, which every year releases its Rich List, ranked the 1,000 wealthiest individuals and families in the UK, pulling out the top hedge fund managers.

The list is largely unchanged from its last iteration in May 2017, with most of Britain's biggest figures in the world of finance maintaining and adding to their already sizeable wealth.

"The recent volatility of global stock markets have provided opportunities for the City's richest hedgies to gild their wealth," Robert Watts, who compiles the Rich List said.

"But life as a billionaire hedge fund manager is not a one-way bet. Four big names of the hedge fund world have seen big falls in their wealth over the past year."

"Managers tend to invest heavily in their funds, so if their fund bombs so does their own wealth," he added.

So who made the list? Check out the top 13 managers, all of whom are worth more than £400 million, below.

SEE ALSO: The 36 richest musicians in Britain

T=12. Andrew Law

Net worth:£475 million

The head of Caxton Associates, Law has seen his net worth stay flat over the last year, despite poor performance from Caxton in 2017. While hedge funds are notoriously secretive, Bloomberg reported in December that Law's fund within Caxton had lost 12.8% in 2017.

T=12. Yan Huo

Net worth:£475 million

Huo, who started his career in finance as a quantitative analyst at JPMorgan, co-founded London-based hedge fund Capula Investment Management in 2005, and has grown the fund significantly since its inception.

His net worth has increased £75 million since last year, according to the Sunday Times Rich List, and he is believed to have taken home £72.2 million in compensation in 2017.

T=10. Ian Wace

Net worth:£520 million 

The cofounder of Marshall Wace, one of the UK's biggest and most recognisable hedge funds, Wace and his business partner Sir Paul Marshall saw their net worth increase by £15 million each in the last year. 

• BlockTower Capital, the crypto hedge fund, is diving into venture capital, according to people familiar with the matter. 
• It has hired Eric Friedman to head up those efforts.  

Crypto hedge fund BlockTower Capital is diving into venture capital investing with a new fund, according to people familiar with the matter. It will devote $20 to $25 million to the new fund, the people said, and will invest in startups in the crypto space.

The Connecticut-based firm, which launched in August, is among the best-known crypto hedge funds in a booming space that now includes over 200. 

To head up its venture efforts, BlockTower has hired Eric Friedman, formerly of Expa, a California-based investment firm. Friedman joined the firm in April, according to his LinkedIn profile, as a partner. 

"Early stage investing @ BlockTower Focused on working with great founders building incredible companies," his profile reads. "Helping people build the machine that builds the business - hiring, scaling,operationalizing and monetizing companies."

Friedman previously worked at Foursquare as global senior director of sales and revenue operations. He also spent some time at Union Square Ventures.

In April, Axios reported on the new fund and on Friedman's hire, but did not definitively report that he was joining to head the fund. 

BlockTower has been hiring new staff since the beginning of the year, including Steve Lee, a former portfolio manager and trader at Goldman, as a director to improve BlockTower's strategic partnerships and business development in Asia.

Earlier this year, BlockTower said it hired former Goldman vice president Michael Bucella as head of strategic partnerships and business development.

April was an amazing month for crypto funds, according to research by Eurekahedge, with the Crypto-Currency Hedge Fund Index gaining 83.86% during that time. 

Joe DiPasquale, the founder of BitBull Capital, a crypto fund of funds invested in seven firms, told Business Insider there is a unique blend between VC and hedge funds in the crypto space. 

"BitBull is seeing a unique blending of equity (venture) and token (hedge fund) investing in crypto markets," DiPasquale said. "Investors in crypto are often excited by the exposure they get to new technologies - the venture-capital like dynamics - while getting extreme liquidity."

A spokesman for BlockTower declined to answer inquiries about the new fund. 

SEE ALSO: A hot crypto hedge fund keeps poaching talent from Goldman Sachs

Join the conversation about this story »

NOW WATCH: What drinking diet soda does to your body and brain

• Bridgewater Associates, the world's largest hedge fund that oversees $150 billion in assets under management, bought $15.7 million worth of Alibaba shares during the second quarter, regulatory filings show.
• Alibaba is one of the stocks included in the "FAANG+BAT" basket.
• Watch Alibaba trade in real time here.

Bridgewater Associates, the $150 billion hedge fund founded by Ray Dalio, bought 84,629 shares of Alibaba in the second quarter, worth $15.7 million, according to regulatory documents filed Tuesday. A back of the envelope calculation shows the stake was established at an average price of $185.52. 

Alibaba is one of the market's most heavily traded tech stocks and part of the "FAANG+BAT" basket, which also includes Facebook, Amazon, Apple, Netflix, Google, and Chinese tech giants Baidu and Tencent. 

Bridgewater's buying of Alibaba shouldn't come as a surprise. Last September, the hedge fund launched a big investment fund in China as it was granted rare access to trade in local financial markets. 

In a LinkedIn post from March, Dalio wrote that an escalating tit-for-tat trade war would be a reason to "worry." But this investment is a way for Dalio to gain exposure to China without having to worry about the impact of a trade war with China. That's because the e-commerce giant is responsible for about 85% of e-commerce sales in China — which helps provide insulation from the trade spat.

Alibaba shares gained 4% in the second quarter despite Trump’s tariff trade spat with China. However they slumped 7% since July as investors have begun to rotate out of the "FAANG+BAT" group. 

Dalio’s other new investments disclosed in the filing include a $31.3 million stake in Cummins, a $14.4 million stake in Walmart, and a 76% decrease in its Facebook holdings — now worth $9.37 million.

Join the conversation about this story »

NOW WATCH: Apple might introduce three new iPhones this year — here’s what we know

• Super rich families are increasingly turning their backs on hedge funds, with the amount of money invested by family offices dropping for a third consecutive year.
• According to UBS' annual survey of family offices, hedge funds now account for just 5.7% of all investments in the sector.
• "Amid concerns over weak performance and relatively high fees, allocations to hedge funds declined for at least the fourth consecutive year," the Global Family Office Report said.
• Away from hedge funds, family offices favored developed market equities, private equity funds, and developed market bonds over the last year, the report said.

The world's super rich are increasingly turning their backs on hedge funds, with the amount of money invested by family offices dropping for a third consecutive year, according to Swiss bank UBS.

According to UBS' annual survey of family offices hedge funds now account for just 5.7% of all investments in the sector.

Family offices, at their simplest, are the private office for a family of significant wealth. This can be through an individual company set up to deal with the finances of a single family, or part of a larger business. HSBC's private office, for example, manages more than $130 billion of assets for 340 families, according to Bloomberg. 

"Amid concerns over weak performance and relatively high fees, allocations to hedge funds declined for at least the fourth consecutive year," the Global Family Office Report said.

Worryingly for hedge funds, the pace of falling family office allocations is accelerating, with a more than 3% decline over the last 12 months.

"Whilst allocations last year dropped a moderate 0.9 percentage points, this year they sped up, declining 3.2 percentage points to bring the average hedge fund portfolio allocation to just 5.7%," the report noted.

The most basic driver behind the move away from hedge funds by family offices is simply that they've not made a lot of money for their clients, pushing investors to look elsewhere.

"Less-than-desirable returns over the past several years, amplified by market volatility, has not played in the favor of hedge funds," UBS notes.

"Having been outperformed by private equity and equities investments, investors continue to avoid extensively diversifying through hedge funds."

UBS then goes on to quote the unnamed CEO of a family office in North America, who provides the following reasoning for the fall in allocations by family offices to hedge funds: "If you look at hedge funds over the last five to eight years, they offer much lower returns than the rest of the market. The purpose of a hedge fund is to limit your downside risk, but you’re not going to get the upside as well." 

While hedge fund allocations have dipped, there's some hope on the horizon, with UBS saying that hedge fund allocations by family offices "should remain somewhat consistent" over the next 12 months.

"While 15% of those surveyed said that they will decrease their investments into hedge funds, a slightly larger proportion, 21%, said that they will increase them," the report said.

Away from hedge funds, family offices favoured developed market stocks, private equity funds, and developed market bonds over the last year, the report said. Cash and agricultural commodity investments were the only other categories to suffer falling allocations, UBS said.

SEE ALSO: UBS has chosen Frankfurt as its post-Brexit EU base

Join the conversation about this story »

NOW WATCH: Beware one huge mistake investors often make when the economy is at a crossroads, says Charles Schwab’s investment chief

Data rules everything in financial markets.

While this view predominates in 2018, it isn’t long since many in the financial industry would have sneered at the idea that computer models and data might be more efficient ways of making money than good old fashioned intuition.

Winton Group, the hedge fund founded in 1997 by David Harding, a British physicist turned investor, was one of the pioneers of data driven investing, basing its philosophy — in the company’s words — on the belief that "the scientific method can be profitably applied to the field of investing."

Harding pioneered a system of investing known as trend following, whereby trends and patterns in markets are identified and used to inform a long term investing strategy.

Winton had assets of around $27 billion (£20.6 billion) at the end of 2017, putting it among the 10 largest hedge funds on the planet.

Business Insider was invited by Winton in September to get a glimpse of the fund’s offices, as well as its recently completed chart room. 

The chart room is a painstakingly curated tribute to financial history which also serves as a reference point for the fund's staff when looking at market trends. Charts are crucial to Winton's philosophy, with Harding calling graphical representations "the only sensible way to engage with economic history." 

Take a look inside the room, which is like a statistical Garden of Eden, below:

SEE ALSO: Inside the New York City offices of $45 billion hedge-fund firm Two Sigma

DON'T MISS: Inside JPMorgan Chase's New York City tech office — the 'mothership' of the bank's $10.8 billion digital ambitions

Winton’s idiosyncratic approach to the world extends to the choice of location for its London headquarters. While most investment firms choose either the bustling City of London, or the swanky district of Mayfair for their offices, Winton is based out of the West London district of Hammersmith, 40 minutes from the City.

Before we get to the chart room, let's take a look at the rest of Winton's office. Like many hedge funds, Winton tends to steer clear of the limelight. Its media presence is minimal, and it is by no means a household name. The office itself is also somewhat inauspicious from the outside. Located just off a main road, it is easy to miss.

The inside, however, is just what you'd expect from a firm operating at the intersection of tech and finance, and wants to attract talent from both sectors. Its sleek and minimalist design is coupled with the sort of features you'd expect from a trendy modern office. There's an in-house barista ...

• Third Point Management, the hedge fund owned by the billionaire Dan Loeb, on Thursday laid out its plan to turn around Campbell Soup. 
• The soup maker has suffered through years of declining soup sales.
• Third Point says the company's entire board should be replaced.

Campbell Soup is rallying Thursday, up almost 2%, after Third Point, the hedge fund owned by the billionaire Dan Loeb, called on shareholders to replace the company's board of directors. 

"One of America's most iconic brands is being left behind by failed leaders who punished shareholders' loyalty," the hedge fund, which has an 8% stake in Campbell, declared in a video released Thursday.

"One dollar invested $20 years ago in the S&P 500 would be worth $4.06 today. $1 invested 20 years ago in the S&P 500 consumer staples index would be worth $4.37 today. But, $1 invested 20 years ago in Campbell would be only worth $1.19."

Campbell's shares had a rocky tenure under the leadership of the former CEO Denise Morrison, who retired in May. Morrison took leadership of the soup giant on August 1, 2011, and over the next five years shares soared by more than 100%.

But after peaking in July 2016, they had lost 40% of their value before Morrison stepped aside in May as the company's main business, soup, struggled through years of disappointing sales.

"This was a disappointing quarter, driven by continued challenges in U.S. soup and Campbell Fresh," Morrison said in the company's second-quarter earnings release.

"The decline in organic sales was largely due to the performance of Americas Simple Meals and Beverages, where U.S. soup sales decreased by 7 percent based on the key customer issue we discussed last quarter."

Third Point's solution: get rid of the entire board, who it says didn't have a succession plan at a critical time for the company.

"Change the board," the hedge fund said. "Not a member or two. All of the people who in our view are responsible for this incredible destruction and who have put the interest of corporate insiders and wealthy heirs ahead of shareholders and employees for too long."

Campbell Soup isn't the only company Loeb is putting pressure on this year. In July, he called for the food group Nestle to divide into three units, spin-off non-core businesses, and appoint an outsider with food and beverage expertise to its board. Previously, he has led turnarounds at Dow DuPont, Yahoo, and Sotheby's.

Join the conversation about this story »

NOW WATCH: Wikipedia founder Jimmy Wales: There's going to be an 'enormous backlash' against Donald Trump's lies

Hedge-fund legend and best-selling author Ray Dalio, who predicted the financial crisis, is coming to IGNITION 2018.

The founder and cochief investment officer of Bridgewater Associates, the world's largest hedge fund, will share his candid outlook on the economy as global tensions rise and the wealth gap widens.

In a discussion earlier this year with Henry Blodget, Insider Inc.'s CEO, cofounder, and editorial director, Dalio drew parallels between the current economic climate and the Great Depression of the 1930s.

Dalio has predicted an economic downturn within the next two years, in part because of the pattern of debt and financial crises that, he says, repeat themselves again and again.

At IGNITION, you'll hear even more from Dalio and Blodget as they meet again to discuss the economy.

Plus, you'll get anecdotes and learnings from Dalio's best-selling book, "Principles." Released in 2017, the book details the unconventional principles that helped foster Dalio's success — and can be used by anyone to get ahead.

Leave IGNITION with relevant takeaways and insights that you can bring back to your office to drive success in 2019.

REGISTER now.

To keep up with IGNITION news, join our mailing list, and you'll be the first to get updates on our speakers and agenda.

SEE ALSO: Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years

Join the conversation about this story »

• Anthony Scaramucci's firm, SkyBridge Capital, beat peers during October's market volatility.
• Scaramucci, who tried to sell SkyBridge to a Chinese conglomerate last year, said he is "absolutely not" thinking about selling the firm now. 

Anthony Scaramucci has found religion — again — in his business.

He lost it briefly last year, living in "an alternative universe" that saw him spending 10 days as White House communications director and attempting to sell his alternatives firm, SkyBridge Capital, to a Chinese conglomerate.

Now, in an interview with Business Insider, the Long Island native said he's back and bullish, despite seeing $2 billion in outflows last year. 

SkyBridge, founded by Scaramucci in 2005, runs one of the few funds of hedge funds to emerge relatively unscathed from October's market rout. SkyBridge's flagship fund, $4.9 billion Series G, returned minus 0.2% net of fees in October, according to the firm. Meanwhile, the S&P 500 Total Return Index was down 6.8% and the HFRI Fund of Funds Composite Index returned minus 2.7%. 

Hedge funds overall saw their worst month since May 2010, leading JPMorgan to predict $5 billion to $10 billion of outflows per quarter in 2019. Series G concentrates its bets on a few hedge funds, with 70% of the capital going to 10 managers. 

Scaramucci was adamant that he has no plans to relinquish his business. In late 2016, he announced a sale to HNA, a Chinese conglomerate that has struggled to receive approval for multiple deals from the US government committee that approves transactions to foreign buyers. The SkyBridge sale, reportedly valued at $180 million, was officially scuttled in April.

Would Scaramucci consider a minority stake sale now?

"Absolutely not," he said. "I’m 100% committed to the firm. I’ve got re-religion on the business. Remember, this was my business. I started it from scratch."

He has "no interest" in working in DC again or in selling a piece of the firm after recent experience. Instead, he's focusing on bringing SALT back to Las Vegas in the spring and to its first Middle East location, yet to be announced, for fall 2019. Scaramucci is also busy readying a fund to invest in opportunity zones, which he thinks could raise up to $3 billion. 

Read more: Anthony Scaramucci is looking to raise as much as $3 billion for a new fund that invests in low-income neighborhoods

"I’m very, very bullish on my firm, and I’m putting my money where my mouth is. I’m the largest stakeholder, and I’m not looking to change that."

Meanwhile, SkyBridge's assets under management — $9.6 billion, as of September 30 — are still ticking back up after $2 billion in outflows. 

"A combination of that was political and some of that was due to our performance in 2016," Scaramucci said. "The people that are in the fund now are probably agnostic to politics or if they hate my a--, they love our performance and don’t care."

More than 80% of Series G's investors are high-net-worth individuals, while the rest are institutional. Through the end of October, the fund returned 6.1% net. 

See also:

Join the conversation about this story »

NOW WATCH: This mind-melting thought experiment of Einstein's reveals how to manipulate time

• Merian Global Investors placed a bet on Renault's shares falling on October 30, according to regulatory filings.
• Renault's shares dropped as much as $8.50, or 14%, on Monday after its CEO was arrested over financial misconduct allegations.

London-based Merian Global Investors, formerly Old Mutual Global Investors, made a sizeable bearish bet on Renault before the stock tumbled.

The fund placed a 0.51% short position on the French car company's shares on October 30. Renault's market cap was about €22.1 billion ($25.3 billion) on that date, meaning the size of the position was about $113 million.

Shares of the French carmaker tanked following news that its CEO and chairman, Carlos Ghosn, was arrested after Nissan outlined his "serious acts of misconduct." Brazil-born Ghosn, 64, is accused of undereporting his salary at Nissan, where he served as chairman. He also held the chairman role at Mitsubishi as part of a strategic partnership between it, Renault, and Nissan.

Since October 30, makers of cars and auto parts have been the worst performing sector in the Stoxx Europe 600 Index, down about 2.6%, according to Bloomberg data. The auto industry has dragged on the overall index, due in part to fears surrounding global trade amid the US-China spat on tariffs.

Merian declined to comment on its trading positions.

Trade-war fears have hit the automaker industry hard this year with Renault now down 33% for the year. The company lost $2 billion from its market cap on Monday.

Merian also has a 1.5% short position in French auto-parts maker Valeo, according to Breakout Point data.

The chart below shows the rest of Merian's short positions by industry:

SEE ALSO: Trump's trade war is starting to whack car companies like Ford, Honda, and BMW

DON'T MISS: The world's biggest shipping company has proof that Trump's China tariffs are battering global trade

Join the conversation about this story »

NOW WATCH: Trump once won a lawsuit against the NFL — but the result was an embarrassment

• Asset management compensation will increase 5% this year, a new study says.
• But there are still major challenges within the asset management industry and things could get worse in 2019.
  

  ---

Asset managers are likely to receive a small bump in their overall compensation this year – around 5%, according to a new report. But that uptick masks some of the larger challenges within the industry, as market volatility, the reallocation of bonus pool dollars to technology investments and declining margins eat into industry profits. 

Overall compensation for equities-focused traditional asset managers is expected to average around $710,000 this year, compared to $490,000 for fixed income-focused managers, according to a survey of more than 1,000 professionals by consulting firms Greenwich Associates and Johnson Associates.

But those figures could fall, as markets have moved lower in recent weeks. 

"Volatility and slowed business momentum has added uncertainty and introduced an element of downside risk that could push final pay numbers lower if markets remain unsettled," the report cautioned.

Read more:

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

• The hedge fund manager David Abrams says Google is "making more money than they know what to do with" right now but will not be the same powerhouse in 20 years.
• Complacency, Abrams said, can hurt companies that make it to the top.
• Even companies that are aggressive about growing can lose ground. "I don't think Facebook is being accused by anybody of being complacent," he said.

Even the most successful companies can't rest on their laurels.

So says David Abrams, the managing partner of the $8.7 billion hedge fund Abrams Capital.

Even Google will not be the "powerhouse" it is now in 20 years, Abrams said recently. "I don't think you can assume anything is unconquerable," he said while speaking at a conference in New York last week at Fordham University's Manhattan campus.

"They're trying to hold off that fate (of declining), but it befalls most people."

Abrams, a protégé of Baupost's Seth Klarman, rarely speaks in public and has been called a "unicorn" by hedge fund peers because the idea that he is often talked about but never seen.

Abrams pointed to Microsoft's dominance during the 1990s, a time when he said it seemed as if the company would "rule the tech world if not the whole world."

"Who would have guessed Microsoft would have completely missed the internet?" Abrams said. "It shows what can happen to even the hardest working and smartest people."

Even aggressive companies can be tripped up.

The scandals that have encompassed Facebook this year over user data misuse are not surprising, he said.

"Wow, shock," Abrams said with a tone of fake disbelief.

"Some company making a lot money is trying to protect its way of making a lot of money."

Abrams did not disclose whether he had a short position in these companies.

A representative for Facebook declined to comment. Google did not respond to requests for comment.

Join the conversation about this story »

• BlueMountain Capital Management, which manages $21 billion, told investors in a recent letter obtained by Business Insider that it increased its stake in utility company Pacific Gas and Electric, despite a November filing from the company warning of liabilities "in excess of insurance coverage" from the deadly Camp Fire in California.
• BlueMountain believes the market overreacted to the company's filing and wrote in its letter that estimated insured losses and private litigation claims against the company from both the Camp Fire and a 2017 fire are "overstated."

BlueMountain Capital Management has doubled down on its investment into spiraling California utility company Pacific Gas and Electric, as the $21 billion hedge-fund manager believes the market has overreacted to the impact of the deadly Camp Fire.

In a December letter to investors obtained by Business Insider, BlueMountain wrote that the firm increased its stake in PG&E by 88% to approximately 11 million shares over the last two weeks. The publicly traded utility company's stock price has fallen by as much as 60% since the Camp Fire began. It closed Tuesday trading at $26.06 a share.

While the manager believes liabilities will exceed the utility company's remaining insurance for this year, BlueMountain told investors that the current estimates of liabilities from the Camp Fire and the 2017 Tubbs Fire in Napa, California, have been "overstated." The market, the letter stated, also has not considered the possibility that an investigation into the cause of the 2017 fire could clear PG&E's name.

"The market assumes too high a probability that PG&E caused the Tubbs Fire, overestimates the face value of 2018 Camp Fire liabilities, and does not incorporate the several ways that the face amount of liabilities may be reduced," the letter said. The manager told investors that it had hired PA Consulting, a London-based consulting firm that specializes in the defense, energy, and utilities industries, among others, to "locally investigate" the cause of the Tubbs Fire, and "their report affirmed our assessment" that PG&E did not cause the fire.

The letter includes a chart that shows BlueMountain predicts insured losses for the two fires to be $11.7 billion total, while sell-side analysts' estimates average out to more than $19 billion. BlueMountain also said the likelihood of back-to-back years of fires of Camp and Tubbs' magnitude "was approximately 1 in 150."

The manager's target price for the stock is $59.10, while analysts' average target is $40.20, the letter stated.

The Camp Fire was the deadliest in California history, killing at least 85, according to the Butte County Sheriff's Office. The Tubbs Fire killed 22 people.

PG&E's stock was hit hard after it disclosed in a regulatory filing in mid-November that Camp Fire liabilities may exceed the company's insurance coverage, and BlueMountain's letter makes clear it saw that as an opportunity to buy.

The firm has hedged its bet on PG&E with a short of State Street Global Advisors' Utilities Select Sector SPDR exchange-traded funds, which tracks an index of utility providers, BlueMountain said in its letter.

A BlueMountain spokesperson confirmed the authenticity of the letter but didn't comment further.

Join the conversation about this story »

2018 was an eventful year in the finance world. From big hedge funds shuttering, to unicorns (finally) filing for IPOs, to huge transformations in the media and telecom industries. 

So what should we expect in 2019?

Business Insider spoke with a variety of of experts, from high flying money managers to prominent investors to top investment bankers and executives. Here's what they said about the biggest trends next year.

Four top investors gave their best predictions for trends in the asset-management industry

Business Insider talked to four top investors in the asset management industry, including executives from JPMorgan and UBS, to get their predictions for 2019. 

They expect that the new year will bring about a number of changes, including the continued culling of products and better exits for early-stage impact investors. 

Here are their best ideas for what next year might bring.

Top investment bankers talk technology IPOs

Despite crazy market volatility in recent months, 2019 will still be a strong year for technology initial public offerings, according to top technology bankers that Business Insider spoke with.

Tech IPOs could break records in 2019 as US bankers prepare for some of the largest private companies in the world, like Uber, Lyft and Pinterest, to make their stock market debuts.

Here tech bankers share their biggest hopes and fears for 2019.

Here are the hedge fund managers to watch next year

It's been a roller-coaster ride for most hedge funds this year. 

Through the first half of 2018, hedge funds were performing pretty well. But that turned sharply in the third quarter. Market volatility in October and November hit hedge funds hard, and a number of large managers like Jason Karp's Tourbillon Capital Partners and Highfields Capital Partners ended up shutting their funds. 

Business Insider talked to top hedge funds consultants, recruiters, lawyers, and investors, who shared their picks about the managers they'll be watching  closely next year in this tough environment. The list includes notable investors like Steve Cohen, who founded Point72 Asset Management, as well as lesser known managers. 

• Hedge funds are experts in shorting stocks, or bets that a stock will fall.
• To help traders have a better idea of the potential investing landmines, Bank of America Merrill Lynch has issued a list of stocks that markets are betting against the most.
• Most of the highly shorted stocks are from the discretionary and technology sectors.

Wall Street expects stock-market volatility to spike further in 2019.

And in a highly volatile market, it's even more important to steer clear of potential investing landmines.

To help traders have a better idea of the potential pitfalls to avoid, Bank of America Merrill Lynch has issued a list of stocks that markets are betting against the most. Most of the highly shorted stocks are from the discretionary and technology sectors.

Here are the 12 stocks that markets believe will fall, in ascending order of their short interest as a percentage of float.

TripAdvisor

Ticker: TRIP

Sector: Communication Services 

Campbell Soup

Ticker:CPB

Sector: Staples

Albemarle

Ticker: ALB

Sector: Materials 

• Pacific Gas and Electric Company, California's biggest utility provider, has seen its value plunge by 80% after last November's deadly California wildfire. 
• The utility on Monday said it intends to file bankruptcypetitions at the end of the month to reorganize under Chapter 11.
• Eight hedge funds snapped up shares in the third quarter — before the wildfire broke out.
• Including Monday's loss, those eight firms would have lost $1.8 billion over the past three months if they held on to their positions, according to Markets Insider's calculations.

Pacific Gas and Electric Company (PG&E), California's biggest utility provider, has seen its value plunge after last November's wildfire, the deadliest and most destructive in California history. And eight hedge funds, which loaded up on PG&E shares in the third quarter, could be have lost billions as a result. 

The past three months have been a tough time for PG&E:

• On November 8, the deadliest and most destructive wildfire in California history broke out. PG&E said it was having trouble with its transmission lines when the blaze erupted, and that it may be responsible. 
• In mid-November, people who lost their homes in the fire sued the company, alleging it was a "direct and legal result of the negligence, carelessness, recklessness, and/or unlawfulness."
• A month later, The California Public Utilities Commission opened a proceeding into the company falsifying safety documents for natural gas pipelines between 2012 and 2017.
• PG&E announced on January 4 that its board of directors would review the company's management, finances, governance, and structural options, prompting media to speculate that it was considering filing for bankruptcy protection, as it feared a massive charge related to billions in costs associated with the wildfire.
• All the bad news led the credit-rating agency Standard and Poor's to downgrade the PG&E to junk last Tuesday.
• And things have gone from bad to worse this week. On Monday, PG&E tanked 48% to $9.04 a share after the company said it intends to file bankruptcy petitions at the end of the month to reorganize under Chapter 11. The utility is also searching for a new CEO following the departure of its previous executive leader Geisha William.

Millennium Management

Position: 2,381,220 shares

Percent of PG&E outstanding: 0.46%

Position change in the third quarter: +1,494,725

Potential loss: $86.4 million

Millennium Management declined to comment on its investment in PG&E.

Source: Bloomberg

Citadel Advisors

Position: 2,864,617 shares (Hedge fund owns 1,943,982 shares; Market-making business owns 920,635 shares)

Percent of PG&E outstanding: 0.55% (Hedge fund owns 0.37%; Market-making business owns 0.18%)

Position change in the third quarter: +915,781 (Hedge fund: +806,121; Market-making business: +109,660) 

Potential loss: $104 million (Hedge fund: $70.6 million; Market-making business $33.4 million)

Source: Bloomberg, Citadel Advisors

Appaloosa Management

Position: 3,991,033 shares

Percent of PG&E outstanding: 0.77%

Position change in the third quarter: +2,197,066

Potential loss: $144.9 million

Appaloosa did not immediately respond to request for comment.

Source: Bloomberg

• Citadel's Surveyor Capital unit has axed long-short portfolio manager Adam Wolfman and his team of three analysts, sources tell Business Insider.
• Surveyor's top stock-picking portfolio manager, Jack Woodruff, is also leaving the firm to start his own fund.
• Other multistrategy managers, including BlueMountain Capital Management and Jana Partners, have gotten out of the stock-picking space altogether.

Surveyor Capital, an equities arm of Ken Griffin's $30 billion Citadel, axed longtime portfolio manager Adam Wolfman and his team of three analysts in December 2018, sources tell Business Insider.

The poor year and a tough environment for traditional stock pickers have also pushed other multistrategy firms, including Jana Partners and BlueMountain Capital Management, to get out of the space completely.

Wolfman joined Citadel in 2014 after nearly a decade at Asian Century Quest, where he managed a portfolio of more than $750 million, according to his LinkedIn. Prior to that, Wolfman was an analyst at Maverick Capital and Lehman Brothers.

Wolfman could not be reached for comment. A spokesperson for Citadel declined to comment.

Citadel, which has credit, fixed-income, commodities, and quant strategies to go along with its stock-picking arms, posted solid returns in 2018 in its main multistrategy fund of 9.1%, according to a source familiar with the matter.

That compares to a loss of 4% on average for hedge funds last year.

Citadel is known for aggressive layoffs following poor performance. Surveyor Capital is also losing one of its top portfolio managers in Jack Woodruff, a veteran of billionaire Steve Cohen's SAC Capital who is starting his own fund. Griffin is said to be an investor in Woodruff's new fund.

The fund has built out certain areas of Surveyor over the last year, expanding to Europe with a London office run by Sean Salji, who was previously with Citadel's global equities team. In 2018, it also recruited portfolio manager Jeremy Klaperman from D.E. Shaw to join Surveyor's New York office and lead a team focused on industrials, and it added more than 50 investment professionals to Surveyor in 2018, according to a person close to the firm.

Overall, there are roughly 30 portfolio managers at Surveyor, a source close to the firm said.

Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.

Join the conversation about this story »

• eBay shares were up more than 9% Monday after the hedge fund Elliott Management on Tuesday revealed a $1.4 billion stake, good for more than 4% of the company.
• Elliott’s stake was revealed in an open letter that recommends a way to create value opportunity at eBay.
• The hedge fund proposed a five-step plan, which it says could value eBay at $55-$63 per share, representing upside of more than 75% to 100% from Tuesday's price.
• Watch eBay trade live.

eBay was surging, up more than 9% Tuesday to $33.81 a share, after billionaire hedge-fund manager Paul Singer's Elliott Management revealed a $1.4 billion stake in the company.

Elliott's stake, which represents more than 4% of eBay, was revealed in an open letter the hedge fund published Tuesday. In its letter, the fund laid out its view for how to create value at the company.

"Elliott believes that by taking steps to unlock strategic value, refocus on the core Marketplace and improve execution – a plan we call "Enhancing eBay"– the Company will grow faster and deliver meaningful operational improvements," the letter reads.

The plan is a five-step solution, which includes a comprehensive portfolio review, marketplace revitalization, margin expansion, as well as revolutions in capital allocation and leadership oversight.

"As a more focused and efficiently run business, we believe eBay can achieve a value of $55 to $63+ per share by the end of 2020, representing upside of more than 75% to 100% within the next two years," Elliott added.

eBay was down 13% in the past year.

Join the conversation about this story »

NOW WATCH: An exercise scientist reveals exactly how long you need to work out to get in great shape

• Michael Graves, a portfolio manager for Steve Cohen's quant arm, will start his own fund — the third launch of his career.
• Graves was one of the top portfolio managers for Cubist, Point72's quant arm, and at least four members of his former team will join him at his new fund. 
• Quant funds struggled last year, losing more money than the rest of the hedge fund industry on average, according to data from Hedge Fund Research. 

A former top quant manager at Steve Cohen's firm is launching his own fund.

Michael Graves, who was a portfolio manger at Point72 Asset Management's Cubist unit for nearly a decade, resigned from the firm in 2018. Now, he's starting his own quant-focused hedge fund and asset management firm, a source familiar with the new venture told Business Insider. At least four analysts and developers from Graves' team will join him, a source said. 

The quant-focused fund will launch in the middle of the summer with a fundraising target between $600 million and $750 million. Paloma Partners, which helped launch quant giant D.E. Shaw in the 80s, is one of Graves' investors. 

Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.

The potential launch comes at a rough time for hedge funds. The average fund lost more than 4% in 2018. Quant funds performed even worse, declining more than 5% for the year, according to data from Hedge Fund Research.

The number of hedge fund launches also slowed in 2018, though big names like former Millennium star trader Michael Gelband were still able to raise money. According to Hedge Fund Research, last year ended with four fewer hedge funds that it began with in January, falling from 8,335 to 8,331.

Graves' new hedge fund, which doesn't have a name yet, will be able to use the track record that he and his team developed at Cubist.

Graves joined Point72 in 2010 after working as a quant for years at firms including the former- Credit Suisse First Boston and BNP quant subsidiary Cooper Neff. Fortress Investment Group bought the first two hedge funds he founded, FountainHead Capital and Area51, and made Graves a managing director in 2006, where he worked until he left to found Tesseract Capital. He left Tesseract in 2010 to join Cubist.

“We appreciate Michael’s contributions to the firm over the past nine years and wish him the best in his new endeavor," a statement from Point72 stated. 

Join the conversation about this story »

NOW WATCH: The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy

• Billionaire hedge-fund manager John Paulson said he would decide on whether to turn his hedge fund into a family office in the "next year or two."
• Paulson told Michael Samuels, the host of the podcast "According to Sources" and a portfolio manager at Broome Street Capital, that his wealth makes up 75% to 80% of his firm's assets.

Billionaire hedge-fund manager John Paulson is giving himself two years to decide if he wants to turn his fund into one that manages only his personal fortune.

Paulson, who made much of his wealth by betting against the housing market before the crash a decade ago, said on an episode of Broome Street Capital's podcast, "According to Sources," that his own money already makes up roughly three-quarters of his firm's assets.

"I'll have to make that decision in the next year or two," he said, citing George Soros and Stanley Druckenmiller as two fellow hedge-fund managers who have decided to focus on managing their personal fortunes. Soros' personal wealth, Paulson said, made up 90% of his firm's assets when he decided to return outside capital and transition to a family-office structure in 2011. Paulson's hedge fund manages roughly $9 billion.

Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.

Several high-profile managers in 2018 decided to transition to family offices, including Omega Advisors founder Leon Cooperman, who said the market had been distorted by quants for traditional stock pickers like himself to make a difference.

Paulson, who was one of President Donald Trump's most public Wall Street backers in 2016, reiterated his support for Trump in the podcast, which is hosted by Broome Street portfolio manager Michael Samuels. Paulson said Trump could expect similar support from him if the president decides to run for reelection in 2020. The hedge-fund manager donated $250,000 for Trump's inauguration celebration and served as an economic adviser for Trump's campaign.

Join the conversation about this story »

• Arconic, the aluminum-products maker, plunged 16% Tuesday after its board of directors said the company was no longer for sale.
• The decision was a blow to Arconic's biggest shareholder Elliott Management, which has been working hard to push for a sale of the company.
• Arconic's plunge on Tuesday may have caused Elliott to lose $166 million, according to Markets Insider's calculation. 
• Seven hedge funds, could have lost a total of $246 million on Tuesday.

The aluminum-products maker Arconic plunged 16% Tuesday after its board of directors said the company is no longer for sale. But seven hedge funds could have lost hundreds of millions of dollars hours after the announcement.

"Together with management, we have been conducting a rigorous and comprehensive strategy and portfolio review
over the past year and as part of that process considered a sale of the company, among other matters," chairman John Plant said in a press release. 

"However, we did not receive a proposal for a full-company transaction that we believe would be in the best interests of Arconic’s shareholders and other stakeholders."

Arconic used to be a part of the metals company Alcoa, but was spun off on November 1, 2016. The company's traditional smelting business kept the Alcoa name, while Arconic retained the added-value aerospace and automotive business involving strong, light alloys.

Shares debuted for trading at $22.24 apiece and put in a high of $31.37 on January 16, 2018. But they have since lost more than a third of their value as Arconic has grappled with having to pay higher aluminum pricesfollowing its split from Alcoa. Additionally, the company has struggled to keep up with demand.  

On February 5, 2018, Arconic initiated its strategy and portfolio review in which it considered selling itself. Arconic's biggest shareholder — the billionaire hedge-fund manager Paul Singer's Elliott Management — was behind the push for a sale of the company.

According to Reuters, the private-equity firm Apollo on Monday tried to acquire Arconic for $22.20 a share, but the offer was rejected. The bid was worth about $17 billion, including Arconic’s $6.3 billion total debt.

The decision was a blow to Elliott, which has an 11% stake in Arconic, according to its most recent filing. Arconic's plunge on Tuesday could have caused Elliott to lose $166 million, by Markets Insider's calculation. 

And Elliott is just one of the hedge funds that could've been hit hard by Arconic's plunge. The company's seven biggest hedge-fund investors could have lost $246 million in total on Tuesday.

To clarify, the firms could have sold their shares before Tuesday, avoiding some or all of the decline. Additionally, they could have hedged their positions, offsetting any losses. 

Below are seven hedge funds that own the largest positions in Arconic, according to their most recent filings:

Empyrean Capital Partners

Position: 1,376,050

Percent of Arconic outstanding: 0.28%

Potential loss: $4.4 million

Source: Bloomberg

Citadel Advisors

Position: 1,539,091

Percent of Arconic outstanding: 0.32%

Potential loss: $4.9 million

Citadel did not immediately respond to request for comment.

Source: Bloomberg

Brigade Capital Management

Position: 1,783,500

Percent of Arconic outstanding: 0.37%

Potential loss: $5.7 million

Source: Bloomberg