Alexander Sacerdote and Whale Rock Capital are having another great year. Not only is the Boston-based hedge fund generating market-beating returns — up 30.1% on the year as of September 30 (theyalso are one of the hottest funds which we keep hearing about) – but they are approaching $2.5 billion in assets under management and starting to think about closing to new investors, a letter to investors reviewed by ValueWalk reveals.
Whale Rock: Hedge fund finds alpha on both long and short side of the market
During his time as a portfolio manager focused on technology at Fidelity Investments, Sacerdote saw both the rise and fall of technology. The NASDAQ Composite index peaked at 5048 on March 10, 2000, just prior to the “tech wreck.” It would take 15 full years for tech investors to get their money back, had they held that long.
With the NASDAQ now powering above 6,900 and engaging in a long-running trend since 2009, tech stocks have held the hot hand. But the secret to Whale Rock’s success is not just found in his ability to pick long opportunity, but also manage short exposure.
In the third quarter, Whale Rock was up 10.1% due to five primary factors.
The fund found “strong alpha on long and short side” ideas. Working with a net long exposure of near 60%, alpha generation was 5.7% on longs and 2.9% on shorts basis the NASDAQ.
It wasn’t just North America where opportunity was found, but Asia accounted for 40% of total fund performance.
The gains were not driven by one or two big winners, but a high win per
centage across the portfolio, with the top impact position only adding 6% of gains while the 10th position added 2% and the 20th best exposure added 1%, pointing to a wide distribution of gains.
Whale Rock on the decline of US tech and rise of Asia
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