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Another hedge fund firm with ties to Julian Robertson Jr.’s Tiger Management has launched a new hedge fund.
Conatus Capital Management, headed by David Stemerman, has raised about $40 million for the Conatus Capital Opportunities Fund, which began operations this month. It is a specialty fund designed to focus solely on technologies that change the consumption of media.
This is the firm’s second new fund in two years. In 2015 it launched a long-only fund, the Conatus Long Opportunities Overseas Fund.
Stemerman launched Conatus in January 2008. He is considered to be a Tiger Grandcub because he previously worked for Stephen Mandel Jr.’s Greenwich, Connecticut–based Lone Pine Capital as a partner and portfolio manager. (Mandel, of course, is one of the original Tiger Cubs, having previously worked for Tiger Management.) Stemerman was also jointly responsible for managing risk across the portfolio. Before that, he worked as an analyst at Ulysses Management, the successor firm to Odyssey Partners (the legendary hedge fund firm founded by Leon Levy and Jack Nash), and HPB Associates.
At year-end Conatus said in a regulatory filing it was managing about $1.9 billion, down from $3 billion three years ago. Entities affiliated with Lone Pine have a minority interest in Conatus.
Conatus’s flagship long-short fund, Conatus Capital Partners, has produced mixed results. It gained more than 5 percent in the first quarter of this year. However, it dropped 6.55 percent last year, its second loss in three years.
But in the other three years out of the past five, the fund climbed by double digits.
Like most long-short managers who have descended from Tiger Management, Conatus runs a fairly concentrated portfolio. At year-end the five largest holdings in the firm’s U.S. long portfolio accounted for roughly 37 percent of its total assets. However, Conatus does not specifically specialize in the favored Tiger strategy of what is called TMT — technology, media, and telecommunications stocks. Its two largest longs were cyclicals, U.S. Bancorp and railroad giant Norfolk Southern Corp.
However, Conatus’s remaining top five holdings were PTC, a computer software and services company; PayPal Holdings, the online payments company; and software and cloud computing giant Microsoft Corp.
