Hedge funds, on average, returned just above 3 percent in the first quarter of 2013, a brutal return compared to buyers of an S&P 500 index fund, who enjoyed a 10 percent return on their money.
Vocal activist and founder of Third Point Partners Dan Loeb was the standout, as timely bets on Yahoo, Japan and liquid natural gas play Cheniere Energy drove the firm's Ultra Fund to a 13.3 percent return through the end of March.
The global diversified hedge fund index from Bank of America Merrill Lynch trailed the S&P 500 by 6.8 percentage points in the first quarter. Typically, hedge funds outperform the market in the first quarter, gaining 3.1 percent on average versus a 1.8 percent average S&P 500 return since 1995, according to the Bank of America report.
Loeb's biggest winner and top position was Yahoo, which is up 19 percent in 2013 on hopes CEO Marissa Mayer — whom Loeb installed after a board overhaul last year — can generate more search clicks and higher ad revenues for the troubled tech.
The hedge fund manager, once known for his acerbic letters to executives, has been among the most active and talked about people in the hedge fund community over the last year because of his vocal invasion of Silicon Valley through Yahoo, as well as his brief stint in going long Herbalife alongside Carl Icahn in the legend's battle against Bill Ackman.
The second biggest winner for the hedge fund manager was a "Japanese Macro" trade, according to the firm's month-end tearsheet obtained by CNBC. Japan's Nikkei 225 index is up more than 15 percent this year after new Prime Minister Shinzo Abe promised bigger spending and aggressive monetary easing.
Japan's central bank meets on Thursday.
(Read More: Expect a Correction in Q2: Investors)
Cheniere Energy, which operates pipelines and terminals, is riding a wave of expectations for an increased export market for liquefied natural gas.
Loeb's top positions heading into the second quarter are Yahoo, gold and American International Group.
As for Loeb's peers, event driven funds, who focus on targeting companies with an upcoming catalyst like a merger, performed the best with a 5 percent return so far in 2013, according to Bank of America. Losses in Europe hit Macro funds the hardest, with those funds little changed on the year.
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