Here’s another reminder about the dangers of shorting in a surging stock market.
A number of tech-heavy hedge funds are off to strong starts this year as they try to work off huge losses from the previous two years. But the stars of the show at several of these firms are their long-only funds, which are not only outperforming the hedge funds but are in some cases more than doubling the broader market’s gains.
Take Maverick Capital, for example. Last year, all three Maverick funds were down by roughly 27 percent to 30 percent, but as Institutional Investor earlier reported, the firm’s long-short Maverick Fund was up 23.11 percent for the first half of the year, easily topping the S&P 500, which was up 16.9 percent, including dividends invested, over the same period.
That’s nothing to sneeze at, but the firm’s long-only fund, Maverick Long, was up 34.7 percent in the first half, while Maverick Long Enhanced, which is designed to be 130 percent long and 30 percent short, has surged nearly 42 percent for the year through June, according to a private hedge fund database.
II earlier noted that the firm headed by Lee Ainslie III has been led in part by its newly established sizable stake in Nvidia, the chipmaker whose stock roughly tripled over the first six months of the year. Maverick has also had large positions in other surging internet and tech stocks, including Meta Platforms, Amazon, and Salesforce.
Whale Rock Capital Management also enjoyed outstanding performance in the first half from its long-only fund, which surged 40.1 percent, according to a person who has seen the results. This compares with a 23.5 percent gain for the flagship fund, which only invests in public securities, and a 13.2 percent gain for the class that invests in both public and private securities.
At the end of the first quarter, Meta was Whale Rock’s largest U.S.-listed long, after the firm more than tripled its stake in the company. Following Meta were Nvidia, streaming giant Netflix, cloud giant Microsoft — for whom Whale Rock boosted its stake five-fold in the first quarter — and software giant Workday.
Light Street, meanwhile, posted a 41.5 percent gain in its long-only fund, versus a 26.4 percent gain in its long-short fund, according to a person who has seen the results.
II earlier reported that Light Street had established four new large positions in the first quarter that immediately ranked among the firm’s nine largest common stock longs, while fully exiting two top-10 positions.
Taiwan Semiconductor was Light Street’s largest new position, and it now ranks as the firm’s third-biggest U.S.-listed long position, accounting for 8.7 percent of the portfolio. Light Street also made sizable new bets on electric vehicle maker Tesla, now its fifth-largest long; Singapore tech giant Sea Ltd.; Twilio, a provider of cloud-based communications tools and services for developers; and MercadoLibre, the Argentinian online marketplace based in nearby Montevideo, Uruguay.
Other high-profile hedge funds with long-only funds posted strong but significantly less stellar results.
Tiger Global’s long-only fund gained 17.6 percent in the first half of the year, compared with about 16 percent or so for its long-short fund, according to a person who has seen the results. At the end of the first quarter, Microsoft and Meta were the firm’s two largest longs, together accounting for roughly 30 percent of Tiger Global’s U.S. long assets.
The firm also more than doubled its position in Google parent Alphabet, now its fifth-largest U.S. common stock long, in the first quarter. It roughly tripled its stake in video game company Take-Two Interactive Software and took a huge stake in Intuit, a move that made the business software company Tiger Global’s twelfth-largest long.
Lone Pine Capital’s long-short fund, Lone Cypress, was up 12 percent in the first half, while Lone Cascade, the long-only fund, rose 18 percent, according to an investor. According to regulatory filings, five stocks have ranked as Lone Pine’s top U.S.-listed common stocks for the past two quarters, accounting for 35 percent of its U.S. assets as of the end of March: Workday, its largest long; Microsoft; Taiwan Semiconductor; retailer Bath & Body Works; and Amazon.
Viking Long Fund, meanwhile, was up 16.9 percent in the first half, more than double the 8.3 percent gain recorded by Viking Global Equities, the long-short fund.
Elsewhere, the Lansdowne European Long Only Fund was up a little more than 10 percent, according to HSBC, while the Lansdowne Developed Markets Long Only Fund was up about 11.5 percent.
