A former founding partner of Eton Park Capital Management is having a rough time in the second year since he left his former firm to launch his own fund.
Anand Desai’s Darsana Capital Partners plunged 9.4 percent in August and is now down 6.61 percent for the year to date. The New York–based, long-short equity fund was down 1.6 percent at the end of June after losing money in each of the first two quarters. In 2014, his first year in operation, Desai returned 6.8 percent after finishing strong in the fourth quarter with a 5.9 percent gain.
Desai’s launch drew attention because of his pedigree and the fact that Desai was able to start with about $1 billion. By the end of 2014, he already had $2.5 billion under management.
Desai worked at Eton Park from 2004 through 2013, serving on the firm’s operating committee and leading its long-short equity and structured-credit investments. Eton Park, a multistrategy firm, was founded by Eric Mindich, the youngest person ever to make partner at Goldman Sachs.
Before joining Eton Park, Desai was a partner at SAB Capital Management, which focused on distressed debt and equity investments. Prior to that, he helped to start Ivory Capital Group.
Darsana takes a bottom-up approach, looking to invest globally and seeking companies and industries undergoing significant secular changes. It has been running a relatively low net long position so far. The firm’s portfolio was 39 percent net long at the end of 2014 and 41 percent at the end of the first quarter, but the manager sharply cut this exposure to 29 percent by the end of June.
At the end of the second quarter, Darsana had roughly $2 billion of its assets invested in U.S. equity longs, spread over just 18 individual issues, plus put and call options on a handful of stocks.
Its largest individual stock position in each of the first two quarters was Spirit AeroSystems Holdings, which makes large commercial aircraft structures. The stock gained nearly 20 percent for the year through the end of August.
Otherwise, most of the largest positions are in media, technology and Internet stocks, such as Twenty-First Century Fox, Liberty Global and the Priceline Group. Fox fell nearly 30 percent for the year through August, while Liberty declined more than 7 percent. Priceline, however, returned nearly 10 percent through August.
Darsana also had sizable bets on Chinese Internet search company Baidu and cable giant Charter Communications, which is about to merge with Time Warner Cable. In the second quarter Darsana also tripled its stake in discount retailer Dollar Tree.
