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Bailey McCann, Opalesque New York:

The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 billion Third Point called the first quarter a "washout" and "catastrophic" for hedge funds in his most recent letter, seen by Opalesque this week.

Despite the dire tone, Loeb still sees some opportunity in the market, noting that the volatility many hedge funds rely on to survive has finally returned after a long equities rally. Loeb, like a handful of other hedge fund managers, has renewed his interest in merger arbitrage. He cited the Dow/DuPoint merger as well as the acquisition of SAB Miller by Anheuser-Busch InBev as recent targets.

Still, Loeb says he expects to see other strategies do less well and indeed other funds, which have suffered at the hands of bad calls. Larry Robbins of Glenview Capital Management also called out other hedge fund managers skill at picking individual names in his first quarter letter. Loeb specifically called out the FANG stocks - Facebook, Amazon, Netflix, and Google as names that haven't worked out well. Robbins noted some additional stocks like Avis, Qualcomm and Hertz among others.

Loeb noted in the letter that "concentration in long health care equities and weakness in the structured credit portfolio caused our modest losses in Q......................

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