Anthony Chiasson still can’t seem to get on a roll since launching his hedge fund firm, Aurmedis Global Investors, in late 2016.
The co-founder of now-defunct Level Global Investors and former SAC Capital Advisors portfolio manager was essentially flat in the second quarter. As a result, his fund remains slightly in the red for the year. The firm declined to comment.
The TMT and consumer specialist has had no trouble picking long positions this year. However, he is getting killed by his short bets.
In the first half, the long book rose more than 10 percent — including more than 8 percent in the second quarter — roughly tripling the return of the Standard & Poor’s 500 stock index, according to the firm’s June performance report, obtained by Institutional Investor. But it lost nearly 2 percent on its short bets in the first quarter and another 7 percent or so in the second quarter, according to the report.
Aurmedis gained 4.87 in 2017, its first full year, after losing 2.54 percent over its initial two months of operation at the end of 2016.
Investors apparently continue to take a wait-and-see attitude before giving money to the firm. It manages just $37 million, underscoring how difficult it is to raise money these days even for someone who has enjoyed earlier success.
In its June report, the firm said its technology portfolio made money on both its long and short bets for the month. In its May report, the firm said software, which represented 18 percent of gross exposure, was its most significant contributor to profits year-to-date at that time.
According to an investor, the firm’s long portfolio was led in the second quarter by its bets on cloud computing, including Splunk, Salesforce.com, and Alteryx. On the consumer side, it has done well with discount retailer Ross Stores and Advanced Auto Parts.
The firm does not file a quarterly 13F detailing its U.S. equity holdings since it is not required to do so because it has less than $100 million in equity assets.
On the short side, Aurmedis is said to have been hurt by secular shorts in the consumer area, especially department stores, where the firm — and many others who go short for that matter — think the longer-term prospects are diminishing.
For the time being, these companies and their stocks have benefitted from the strong economy, tax cuts, and lousy comparisons with the previous year. According to an investor in the fund, however, Aurmedis is surprised that the price-to-earnings multiples on many of its consumer/retail shorts have sharply rebounded.
Aurmedis generally runs a diversified portfolio, holding 49 longs and 32 shorts at the end of June.
At the year’s half-way mark, the fund’s gross exposure surged to an all-time high of 202 percent. However, its net exposure was just 14 percent, which the firm explains is “consistent” with its low-net-exposure strategy in general. Aurmedis does not mind letting its gross exposure rise as long as its so-called directionality — being long or short — is not high.
At the end of June, technology and consumer stocks each had a gross exposure of about 71 percent or so. Media stood at 28.3 percent, telecom and 4.9 percent, and “other” at 27.5 percent.
