| Andreas Halvorsen, Viking Global Investors (Photo credit: Bloomberg). |
This year is starting off a lot differently for the Tiger crowd than last year.
After a majority of the hedge funds with roots in Julian Robertson Jr.’s Tiger Management suffered losses in 2016 — sizable in some cases — a number of them have posted some of the best performance numbers among all hedge funds in the first quarter of this year.
What’s different this time? Simply put, the kinds of investments that badly hurt many of these funds last year fueled the strong gains this year. In most cases, the long-short funds made big bucks on internet, technology, and media stocks.
And although the stock market in general surged in the first quarter, the top-performing long-short firms appear to have held their own on the short side, thanks in part to big bets against traditional retail companies.
For example, we have already reported that Tiger Global Management’s long-short funds returned 13.5 percent for the quarter. Tiger Global’s gains were heavily driven by high-teen to low-20s returns from the Priceline Group, JD.com, Amazon.com, and Charter Communications.
Lone Pine Capital’s long-short funds gained between 9 percent and 10 percent, while the long-only fund, Lone Cascade, returned 11 percent. Lone Pine’s gains on the long side came from technology, media, internet, and cable stocks. Among its five largest U.S. long positions, Charter — its largest long — gained about 21 percent for the quarter, e-commerce giant Amazon.com rose more than 18 percent, and video game maker Activision Blizzard jumped 38 percent.
Perhaps the best performer among the Tiger crowd was one of the smaller Tiger descendants. Light Street Capital Management, founded in 2010 by former Tiger Management analyst Glen Kacher, posted a 7.2 percent gain in March. As a result, it was up 20.3 percent for the quarter.
The fund was driven by long positions in social media, e-commerce, cloud computing, and mobile communications companies.
Christopher Hansen’s Valiant Capital Management posted a roughly 13 percent gain in the first quarter after rising 5.24 percent in March alone. Its liquid portfolio returned more than 16 percent for the quarter, while its side pockets — its sizable portfolio of private companies — gained between 6 percent and 7 percent.
Valiant also did well by mostly standing pat with the stocks that had cost the firm last year, adding to some positions when the stock prices sagged. For example, Valiant’s four largest longs at year-end were U.S. stocks. Apple, its largest long, rose about 24 percent. Facebook surged 22 percent, while Google rose more than 7 percent. Valiant, which had about 40 percent of its portfolio in India, also heavily benefited from a surge in that market.
Meanwhile, Martin Hughes’s Tosca Opportunity, a smaller fund among the well-known Cubs and managed out of London-based Toscafund Asset Management, returned 8.8 percent in the first quarter. The fund is unusual for a Tiger Cub since it specializes in shareholder activism. Its gains were driven by two longtime holdings: Esure, a UK internet-based insurance company, and IWG, formerly called Regus, which is a Brussels-based provider of office space and services.
O. Andreas Halvorsen’s Viking Global Investors also fared pretty well last quarter, especially on the long side.
Viking Global Equities, the firm’s long-short fund, returned 4.9 percent for the period, versus a loss of 3.6 percent in the fourth quarter of 2016 and a 4 percent loss for all of last year.
First-quarter performance was driven by the firm’s long positions. After all, its Viking Long Fund gained a healthy 8.5 percent for the quarter, much better than the widely followed indexes.
Its largest longs at year-end were both classes of Alphabet, Facebook, Microsoft Corp., and Amazon.com.
Amazon.com and Facebook were two of the three worst performers in both funds last year. In the March quarter they were up 18 percent and 22 percent, respectively.
This is life in the tech-internet lane.
