Hedge Fund Stocks
Going through the recent round of hedge fund letters, it feels like many of the very respected LS hedge funds own a disproportionate amount of very high profile/large cap internet/tech stocks (Amazon, Netflix, Google, etc.) - especially the large, prestigious Tiger Cubs. Just my opinion, but seems pretty silly for investors to pay 2 and 20 to ultimately own Google when that's probably the most heavily owned stock in every retail investor's PA.
I've seen portfolios where FANG stocks are prob close to 25% of positions, and prob 50%+ are made up of heavily retail-owned names such as Visa, etc. Tiger Global's 13F shows that 42% of the portfolio is Netflix and Amazon alone. I understand that Google is an incredible company/stock, but why should investors pay 20% fees for returns on Google when they can buy in their PA and pay 0% fees on those returns? Sure, maybe the HFs are better at trading around the names, but many of the Tigers are long term investors that don't really trade around, so what are investors paying for?
I'm not a fan of concentrated blue chip ownership, but the Tiger cub model is to find LT compounders while generating alpha from shorts. Why don't you pick apart their short book if you have their letters.
Some of the top Tech, Media, and Telecom hedge funds have concentrated holdings in the blue chip tech stocks, but most are investing in a wide range of mid-sized and emerging tech and media companies, as evidenced by the Top TMT Hedge Fund rankings: http://www.hedgetracker.com/article/Top-TMT-Hedge-Funds-up-nearly-17-20…
if you think a 13F is all inclusive, you're kidding yourself.
You are not paying 2/20 to own GOOG but for a team that comes up with good/smart ideas, even if some of them may coincide with "generic investments" such as GOOG. IMO it would be very wrong if an HF manager (and any investor) to not go long on a stock on the simple premise that it's a "blue chip".
Another more technical reason (not sure how realistic it may be) is anticipation of redemptions and not willing to give up on other equity investments. Suppose in this environment some LPs want to redeem some capital and some high conviction bets are yet to materialize. The PM in this case will have the liquidity to sell some blue chip stock instead and give the money to the LPs and keep those bets on if it doesn't change the %weight holdings too much.
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