Niederhoffer's Second Act Has Plot Twist

The May selloff in stocks couldn't have come at a worse time for hedge fund manager Victor Niederhoffer, who's been working hard to put his infamous 1990s boom-to-bust story behind him.

In May, Niederhoffer's four-year-old Matador Fund posted one of its worst months ever, industry sources say. The fund, which specializes in trading stock futures and stock index futures, lost nearly 29% as the U.S. markets began to unravel, reducing the value of Matador's holdings to about $247 million.

As of the end of May, the so-called commodity trading adviser fund, which was once up 31% for the year, was 6% in the red since the end of December. Results for June, which is shaping up as another harsh month for investors, could not be determined.

Niederhoffer, in an email response to TheStreet.com, confirmed Matador's big percentage loss in May, but noted the fund has registered gains in 29 of the past 32 months.

"As of May, we were close to even for the year,'' says Niederhoffer. "Considering everything, after three years where ... we were at or close to the top-performing CTA, I consider that well above what one might have hoped for.''

Niederhoffer's horrendous month comes as some on Wall Street are proclaiming the 62-year-old trader, who lost it all in the October 1997 market meltdown, back at the top of his game. Matador was up 56% last year and the fund's outsized performance in 2005 recently earned Niederhoffer a hedge fund industry award and a favorable profile in Bloomberg Markets, the news service's glossy magazine.

On April 6, MARHedge, a hedge fund industry trade group, named Matador the top-performing CTA for its past performance. The group, during a ceremony at New York's swank St. Regis Hotel, noted that Matador not only posted a 56% gain in 2005, but that the fund has managed an average annual return of 41% since its inception.