Technology specialist hedge fund firm Andor Capital Management posted strong results for November.
However, the Rye Brook, New York, firm led by Daniel Benton is headed for its second straight rough year. In addition, the firm’s normally concentrated long-short equity fund, which is characterized by huge monthly swings in performance, has heavily pared back its overall market exposure in recent quarters, especially in the September period. The firm fully liquidated 18 positions in the third quarter, leaving it with just 16 individual holdings.
Benton co-founded Pequot Capital Management with Arthur Samberg. Andor spun out of Pequot in 2001, and its assets peaked at $9.6 billion in 2003.
However, after suffering huge losses in the 2008 financial crisis, Benton shut down Andor. He then began his latest chapter with his comeback in 2011.
In any case, the firm’s flagship Andor Opportunity Fund posted a 4.1 percent gain in November. Heading into December, however, the fund was up only somewhere in the very low single digits, says a person familiar with the results. Last year Andor lost 10 percent or so.
A big part of this year’s results rests with the fortunes of Tesla Motors, the revolutionary electric-car maker.
The stock was Andor’s No. 1 holding for the past two quarters, accounting for 39 percent of the firm’s U.S. equity assets at the end of the third quarter and 25 percent as of June 30. Tesla accounted for nearly 19 percent of assets at the end of March, slightly behind top holding Twitter.
Although Tesla’s stock has been volatile all year, it still managed to post a 4.5 percent gain for the year through November as well as year to date.
In the third quarter Andor established a new position in the A shares of Alphabet — the new name for Google — accounting for 10 percent of the hedge fund firm’s assets.
Although we have no way of knowing when exactly Andor purchased the shares, the stock has performed well no matter when the firm bought in. Alphabet is up 40 percent since the beginning of the third quarter. It would even be up 10 percent if Andor had bought all of its shares on Alphabet’s highest trading day in the third quarter.
Altogether, Andor slashed the size of its U.S. equity portfolio by about 40 percent in the third quarter, to $636 million, from nearly $1.1 billion at the end of the period. At year-end 2014 that portfolio had $1.6 billion.
The decline, however, is not due to performance or redemptions. According to a person with knowledge of the firm, Andor has been aggressively cutting its overall exposure to the market in recent quarters. The sharp decline in assets reported in quarterly 13F filings of equity holdings reflects the big reduction in the firm’s long exposure. However, these moves do not necessarily mean Andor has slashed its net exposure, stresses the source.
In any case, of the 18 positions Andor liquidated in the third quarter, four were stocks that each accounted for more than 5 percent of the firm’s assets at the end of the second quarter. They are Apple, Twitter, Alibaba Group Holding and semiconductor company Qorvo.
Meanwhile, Andor’s investors know that although there is less than one month left in 2015, Andor could still salvage the year if history is any guide.
Remember, this is the firm that in 2014 surged 19.5 percent in June alone after losing about 9 percent the previous month.
