| Photo credit: Bloomberg |
So much for the resurgence of Etsy, one of the more volatile IPOs in recent memory.
Shares of the online marketplace for craftspeople, artists and related hobbyists fell 8.6 percent Tuesday — and once again dropped below their $16 IPO price — after surging nearly 30 percent over the previous six-day period from their historic low. Is the stock headed for a new low, or is this simply a case of bottom-fishers taking profits before the stock resumes its trajectory?
Whatever happens, there is probably no investor with more at stake than Charles (Chase) Coleman III’s Tiger Global Management. Thanks to a variety of private and public investments in Etsy, New York–based Tiger Global is one of the largest investors in the stock, which went public on April 1 and closed at $30 on its first day of trading, for a gain of 88 percent.
In early August, however, the stock plummeted 28 percent in one day after the company missed earnings forecasts. Etsy said it was hurt several ways by weaker local currencies in key international markets. It also reported a net loss that was double the loss from the year-earlier period.
Part of the recent price surge was almost certainly due to short-sellers covering their positions, while some investors are probably betting the stock dropped too low. However, there was no apparent news on Tuesday that would have driven the stock back down.
Due to the Securities and Exchange Commission’s skimpy disclosure rules, it is not known who bought the shares in the IPO — let alone last week after the huge price drop — and how long they held on to them. We have no idea if any or how many hedge funds made a big killing the first day and then flipped the shares. We know only who held the shares as of June 30, based on quarterly filings mostly made the end of last week. And based on those disclosures, it does not appear that many hedge funds were in the stock on that day.
For example, Blue Ridge Capital, the New York hedge fund firm headed by Tiger Cub John Griffin, disclosed it is Etsy’s 12th-largest shareholder, although its 695,000 or so shares are a very small holding in its portfolio. The only other hedge funds with exposure to the stock mostly own options, both calls and puts.
Tiger Global, however, is all in. The investment firm is the second-largest shareholder, with ten million shares, making it the New York firm’s 15th-largest public stock holding.
However, it is not just Coleman’s hedge funds that have a large stake in Etsy. His venture capital funds have also been large investors.
According to the first-half report from Tiger Global’s Private Investment Partners (PIP), obtained by Alpha , the firm owns a total of about 9 percent of Etsy. This includes stakes owned by two of the PIPs since Tiger Global did not sell any shares in the IPO.
In addition, the public funds — the firm’s long-short hedge fund and its long-only fund — also bought shares.
There is no way of knowing, however, whether this position changed when the stock recently plummeted, rebounded and then fell again.
