| Steven Cohen, founder of Point72 Asset Management and its predecessor firm, SAC Capital (photo credit: Simon Dawson/Bloomberg) |
This has been a mostly mixed year for the loosely connected group we call the SAC Pack — those hedge fund managers with ties to Steven Cohen’s SAC Capital Advisors.
Although stock pickers, especially those who are mostly positioned to be long, have led the way, four of at least eight SAC Pack funds that we track are in the red this year through May. However, two of them are posting solid double-digit gains: Suvretta Capital Management and Electron Capital Partners.
Suvretta, founded by Aaron Cowen, has emerged as one of the best performers in this relatively small universe. The various classes of its Suvretta Capital fund are up between roughly 12 percent and 16 percent for the year through May.
Suvretta managed about $2.6 billion as of October 1. At the start of this year, it launched the Suvretta Long Partners fund. The firm did not respond to phone calls seeking comment.
Cowen previously worked at Lehman Brothers, Seth Klarman’s Baupost Group, Michael Karsch’s Karsch Capital Management, and SAC Capital, where he spent two years or so as chief investment officer. Just prior to launching Suvretta in 2011, Cowen spent nine months as a portfolio manager at George Soros’ Soros Fund Management.
In any case, Suvretta has thrived for many of the same reasons a large number of the Tiger Management–related funds have soared — it is heavily exposed to turbocharged technology and internet stocks. At the end of the first quarter, Suvretta’s five largest positions were also among the top-performing stocks so far this year: software giant Adobe Systems; Google parent, Alphabet, a new position; cable and broadband giant Charter Communications; distiller Constellation Brands; and Restaurant Brands International, the owner of Burger King, Tim Hortons, and Popeyes.
Through May, Adobe was up about 38 percent, Alphabet climbed 25 percent, Charter gained about 20 percent, Constellation rose about 19 percent, and Restaurant Brands International added nearly 30 percent.
Meanwhile, Electron Global Master Fund, managed by James (Jos) Shaver, gained 7.5 percent through May and 10 percent through June 23. Shaver was previously a portfolio manager at SAC for four years. Electron declined to comment.
Unlike Suvretta and many of the other top-performing long-short funds, Electron eschews the high-wire stocks. The firm, founded in 2012, specializes in infrastructure stocks and global utilities. Two thirds of its roughly $700 million in assets — which have doubled in the past 18 months — are invested outside the U.S. One is hard-pressed to find its largest holdings among the list of the most popular hedge fund stocks. This is a double-edged sword. Electron doesn’t benefit from momentum trades, but it won’t be crushed when hedge funds decide the trade is no longer attractive.
In the first half, Electron did especially well with U.S. utility stocks, especially those with renewable exposure such as NextEra Energy and Avangrid; European utility stocks that are undergoing restructurings; and Asia infrastructure-focused stocks, particularly in Indian electricity transmission and Chinese environmental water sector companies. It has also done well from shorting power-related independent power stocks.
Over the years, the fund has averaged a 28 percent net long exposure.
Electron recently boosted its position substantially in Chinese environmental water companies due to increased environmental standards expected for water supply treatment.
It also significantly boosted its position in Électricité de France (EDF), the French electric utility, after the stock dropped in April.
