The Seligman Tech Spectrum Fund has sharply cut back on its net exposure to the stock market since year-end.
The hedge fund headed by Paul Wick was 48 percent net long as of the end of February, down from 57 percent the previous month, with all of the reduction coming on the long side. This was down from 91 percent at the end of December, according to Seligman client reports seen by Institutional Investor.
The year-end level was an aberration for Seligman. Last year, its net exposure ranged between 47 and 62 percent. Its gross exposure of 119 percent at the close of 2024 was also unusual, given that the fund generally runs between 150 and 160 percent. It was at 152 percent at the end of February.
Still, Seligman was down 1.7 percent through February after losing about 2 percent last month. The fund underperformed the market the previous two years, climbing 15.9 percent in 2024 and 11.5 percent in 2023. But Seligman’s long-term investors are probably okay with this. Unlike most tech-focused hedge funds, Seligman did not suffer a sharp loss in 2022, gaining 1.6 percent that year and surging 50.9 percent the previous year.
Seligman’s monthly and quarterly letters — its January 2, 2025, letter was its first since the summer and fall earnings reporting periods — often provide an interesting, detailed look at the portfolio’s positioning, on both the long and short sides.
As of February 28, the fund’s five biggest long positions accounted for 23.2 percent of the long portfolio and 23.1 percent of total net assets. They were, in order of size, Bloom Energy, a maker of solid oxide fuel cells; semiconductor equipment supplier Lam Research; Broadcom, a maker of semiconductor and infrastructure software products; Alphabet Class A; and Nvidia. All but Bloom have been top-five holdings for more than a year.
In its more detailed year-end report, Seligman said it had fully unloaded three major telecom stocks that hit its price targets: T-Mobile, American Tower, and Crown Castle. “T-Mobile had been a holding of ours for three-plus years and a solid contributor to returns, so selling wasn’t an easy decision,” Wick conceded.
Seligman also established several new positions in the second half of last year. It bought networking equipment giant Cisco Systems, citing its modest valuation, operating expense reductions from layoffs, and improving fundamentals “as enterprise networking demand rebounds and the Splunk acquisition boosts growth.”
Seligman also purchased Hewlett Packard Enterprise, noting its low valuation, earnings accretion from the Juniper Networks acquisition, “and levered-to-AI server demand.” The hedge fund initiated a stake in Juniper Networks, citing its AI-related demand improvement and “hot-selling wireless network product set” that Seligman asserts “have turned a dull company into a growth story again.” It points out that there is a good merger arbitrage spread for the $40 all-cash takeover offer from Hewlett Packard, adding that if the Department of Justice derails the merger, the renewed growth at Juniper “means that its valuation has modest downside risk.”
Seligman also bought contract chip giant Taiwan Semiconductor Manufacturing, saying “the company has somehow managed to gain even more share of leading-edge semiconductor devices as Samsung has struggled and Intel’s foundry business has floundered.”
In addition, the fund established a new position in Unity Software, calling it “one of the leading providers of in-app advertising software and game development tools.” It said that new management has made good strides in turning around the company after the previous CEO “made numerous value-destroying acquisitions.”
Two of the five new positions — Bloom Energy and Hewlett Packard — rank among Seligman’s list of eight stocks it is “most enthused about” in 2025. The others are dating app Match Group, eBay, Lyft, Global Payments, semiconductor supplier Lam Research, and disk drive company Western Digital.
As of February 28, the top-five positions on the short side accounted for 22 percent of the short portfolio and 11.4 percent of total net assets, according to the monthly letter. One of the short positions is in electric-car company Tesla, the the top contributor to performance last month.
