Eric Bannasch’s Cadian Capital surged about 18 percent last month, exceeding the S&P 500’s 13 percent gain during the stock market’s best month since 1987, per a knowledgeable source and a hedge fund database.
The trajectory continued in the first week of May. The tech-focused firm is up 23 for the year through Thursday, according to the source.
Cadian notably had a relatively low net long position, ranging this year from 2 percent to 40 percent and averaging around 30 percent, according to the person familiar with the portfolio.
The company declined to comment.
Bannasch founded the firm in 2007. Cadian, which manages about $2.3 billion, is one among a group of lesser known hedge funds that have distinguished themselves in recent years.
The firm was up nearly 18 percent last year and a little more than 20 percent in each of the previous two years. Stock indices finished 2018 in the red, of course. Since inception, Cadian Capital has compounded at slightly less than 11 percent, according to a database.
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Cadian calls itself a fundamental, bottom-up firm, with a focus on technology, media, telecommunications, healthcare, industrials, retail, consumer, and other related sectors, according to client communications.
Bannasch spent four years with Perry Capital as a managing partner and portfolio manager in the technology, media, and telecommunications practice.
More recently, Cadian was up a little less than 1 percent in the first quarter of this year as the S&P 500 plunged 19.6 percent. The firm’s net exposure had been as low as 2 percent at one point and is now closer to its historical average of about 32 percent, according to a person familiar with the portfolio.
In April, it made money from long positions in e-commerce, media and cybersecurity, according to the source.
Many of the organization’s top holdings at year-end are not popular among tech-oriented hedge funds.
IAC/InterActiveCorp — owner of various media and internet brands — was by far the largest U.S. stock holding, accounting for 14 percent of the portfolio’s $2.2 billion in assets, according to a December 31 quarterly filing. Cadian has held a position in the stock since the third quarter of 2014.
Cybersecurity giant Palo Alto Networks was the second largest long at year-end, representing more than 7 percent of assets. The hedge fund firm has owned this stock since the third quarter of 2016.
Rounding out the top-five were biotech firm Blueprint Medicines, data security and analytics company Varonis Systems, and Zynga, a social game developer. Cadian initiated its position in Blueprint and Varonis in the first quarter of 2019 and Zynga in 2016. Each accounted for roughly 6 percent to 7 percent of assets.
The firm’s first-quarter U.S. long portfolio won’t be disclosed for another few days.
