Another day in the world of hedge funds, one Tiger grandcub is really down while the other is really up. II Alpha‘s exclusive on the performance of two managers who have worked with the likes of Stephen Mandel and John Griffin shows how divergent two equity long/short hedge funds can be in terms of making money, even if they are Tiger Grandcubs.
Valiant Capital Trailing S&P 500 By A Wide Margin
Lets talk about the under-performer first—Christopher Hansen’s Valiant Capital is down -17% in its two flagship hedge funds at the end of June. The firm managed $2.4 billion to the end of 1Q2012. Hansen took a 1.8% loss in June in his long/short equity funds, Valiant Capital Partners and Valiant Capital Partners Offshore. The poor returns from Valiant particularly stand out as equity long/short strategy has done much better than other approaches in this year. It is estimated that the Valiant funds lost roughly 9% in the past quarter alone.
The negative performance in the first half of this year adds to the already poor returns of 4Q2012 when the flagship hedge funds declined 4%, trailing the S&P 500 index by a wide gap. Before starting up Valiant in 2008, Hansen had worked for seven years at Blue Ridge Capital with the original Tiger cub, John Griffin. Valiant’s publicly disclosed portfolio has major positions in Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and LIBERTY GLOBAL PLC (NASDAQ:LBTYA).
Hansen’s funds have significant exposure in Brazil and India. The Hedge fund most likely lost in its longs in emerging markets and also from its short book which has been difficult to master in the time of rising markets.
White Elm Doing Well In Short Portfolio
Meanwhile another grandcub did much better. White Elm, an equity long/short fund churned out a gain of 11% through June of this year after compounding a 4% gain last quarter. Matthew Iorio, who established White Elm, has worked with Stephen Mandel at Lone Pine Capital before. In contrast to Valiant’s AUM, which declined from $2.8 billion at the end of 2012 to $2.4 billion till 1Q2013, White Elm increased its assets to $551 million in the flagship fund, from $270 million last year.
Again unlike Hansen’s Valiant Capital, Iorio has been doing well in the short book, although it is not clear how much he gained in his bearish bets. Roughly half of White Elm’s $1 billion AUM is invested in U.S. One of the big gainers for the Hedge funds was a position in Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) which turned out to be highly profitable as Vodafone Group Plc (NASDAQ:VOD) (LON:VOD)’s $10 billion buyout offer was accepted by the German cable company. The Hedge fund also took gains in its long portfolio in North America.
Tiger Grandcubs Losses
The Hedge fund took losses in Golar LNG Limited (USA) (NASDAQ:GLNG), which produces and ships liquified natural gas and lost only marginally in its short book. The gainers for last month were LIBERTY GLOBAL PLC (NASDAQ:LBTYA). White Elm told investors that it was bullish on Domino’s Pizza Group PLC. (LON:DOM). The fund’s top five longs are in Golar LNG Limited (NASDAQ:GLNG), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), LIBERTY GLOBAL PLC (NASDAQ:LBTYA), Ocwen Financial Corp (NYSE:OCN) and SBA Communications Corporation (NASDAQ:SBAC).