| Glen Kacher, founder and president of Light Street Capital Management LLC, speaks during a Bloomberg Television interview (Photo Credit: Victor J. Blue/Bloomberg). |
Many hedge fund firms with ties to Julian Robertson Jr.’s Tiger Management are enjoying strong recoveries this year after posting losses last year, especially those that specialize in technology, media, telecommunications, and internet stocks.
The most exaggerated example is Chase Coleman’s Tiger Management. As we recently noted, its long-short funds have surged about 17.4 percent this year through April after losing 15.3 percent in 2016. One up-and-coming Tiger descendant, however, has blown right by those gains this year after suffering just a small loss last year.
Light Street Capital Management, founded in 2010 by former Tiger Management analyst Glen Kacher — making him a Tiger Cub — posted a 6.8 percent gain in April in its long-short fund, Light Street Halogen. As a result, it is up 28.5 percent for the year. Last year it lost 1.6 percent. The fund, which manages $950 million, also posted double-digit gains in three of the four years between 2012 and 2015. The firm declined to comment.
Light Street, which typically runs 53 percent net long, was more than 61 percent net long at the end of the first quarter, according to a March client report obtained by Alpha. In the first quarter alone, its long book posted a 28.16 percent gross gain, while its short book cost the fund only 2 percentage points.
The bulk of the exposure at the end of March was to the software and services sector. The firm is very bullish on cloud computing in general. In addition, the combined group it calls consumer, e-commerce, and retailing accounted for most of the remaining net exposure.
Light Street takes a global approach. North America accounted for 29 percent of its net long exposure, while emerging markets accounted for nearly 22 percent, followed by Europe. Interestingly, this is its largest-ever exposure to the U.S.
This global approach is underscored by Light Street’s top five holdings at the end of the first quarter. Just two are based in the U.S.: Facebook and LogMeIn. Light Street significantly boosted its stake in Facebook in the first quarter; the social media pioneer was just the firm’s 12th-largest U.S. long at year-end. LogMeIn, the largest U.S. long at year-end, is a software company with remote access and collaboration tools. It has a conferencing and remote product called Join.me. LogMeIn is based in Boston, but its technical founder is from Hungary.
Light Street’s largest position overall in the portfolio at the end of the first quarter was in Momo, a social media company in China. It started as a dating business and until recently was similar to Match.com. However, it has also developed a quirky but wildly successful live broadcasting business, where people hang out, sing, dance, and joke around. Anyone can go on and observe for free and chat with the performers, and if they like them, they can buy a virtual item as way of tipping them.
Sony Corp., the Japanese consumer electronics giant, was Light Street’s fourth-largest long position, while Tencent Holdings, the Chinese internet giant, was the fifth-largest long. Tencent is said to have a very strong messaging business that competes with Facebook and Apple.
Light Street also has a big short bet on retail, according to people familiar with the firm. Interestingly, at the end of the first quarter, within the consumer, e-commerce, and retailing group, the firm was 41.4 percent long and more than 27 percent short, presumably reflecting the retailing short strategy.
