Thoughts on Abdiel Capital?
What do people in industry think about Abdiel Capital? Returns seem off the charts (especially this year).
I know they take undergrad interns but they never seem to return, often have good jobs after but curious if this is because its not desirable or because the fund is very small and selective with its hiring.
Anyone have any concrete information on the fund?
They invest in nascent business models with big tailwinds - investing ahead of the S-curve. Seems pretty elite guys with Harvard degrees. Heard good things about them.
Good "comp" for Abdiel would be Whalerock (run by Alex Sacerdote), Atreides Management (run by Gavin Baker), Hayden Capital (run by Fred Liu) and some of the Tiger cubs like Coatue and Tiger Global.
Don’t think they are on the level of those tiger cubs. Their fund is several times smaller and while their team is very, very smart (partner from chieftain cap/rhodes scholar), they don’t have as much of a reputation for later stage investments.
Agree and Hayden has even less business being included
Hayden capital? Are you fking kidding me?
It’s a one man shop, so quite respectable. I looked at some of the presentations and materials on website and the philosophy of value and compounding is mostly borrowed buzzwords. Not much to differentiate from the hundreds of other “deep value” investing shops out there. That said, Fred seems to know his stuff. But just nothing special.
I will say that their returns have generally beaten S&P historically. They really knocked it out of the park this past year but Fred probably just bought puts, went long vol. strategies or shorted real estate/COVID impacted sectors/indices in March through April to get those 20% monthly returns. Seems like Fred’s young enough to read reddit WSB, haha.
Hi Fred lol
So did you end up choosing the startup HF or the more established HF ?
Ah yes one dude with $9mm AUM charging 50bps for a million dollar client is comparable to Whale Rock. Classic
Yeah agreed, Hayden Capital is a total meme. Their investor presentation literally has the quote:
“You don’t need a scale to know that a 350 lb man is fat.” - Ben Graham, Author of Security Analysis
And according to the same presentation, https://www.haydencapital.com/wp-content/uploads/Hayden-Capital-Present…, they have an annualized return of 31.6% over the past 6 years. Not bad, but it's also easier to do that with a much smaller fund.
What can one expect for comp and hours at a place like this? Super lean team so potential for good comp and the super long term investing style could be a mixed bag, deep dilligence vs not being tied to markets all the time
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It's more the latter. If a fund has been around for a while, spots don't usually open up unless someone leaves. For example, my fund has not hired someone in the past 3 years (although we will meet candidates regularly who are referred to us). So my guess would be that Abdiel has a small team and is not actively looking to add someone new unless an intern is truly extraordinary.
How many companies do you cover and do you have in-depth models for each?
Why do big funds have a harder time outperforming than smaller funds?
Nascent business models with big tailwinds is good descriptor. Would also add: businesses undergoing a misunderstood transition in biz model or quality of moat + very focused on finding management teams who are both growth and capital return minded.
They had a very non traditional interview process. Instead of doing a standard multiweek case study like most of the other L/S, they wanted me to do a qualitative research project on a specific market and wanted to see how I approached a few expert calls. I walked away from that process with a high opinion of them. They definitely differentiate.
I'm OP. Would you mind PMing?
do you mind PM'ing me i am currently in the process and would love your added insight on a couple of questions
Abdiel in a heartbeat. They have to be the hottest shop around. The returns are indeed off the fucking charts - who else is returning 80% 4 years straight? They're up 1500% all time in 4 short years...
Abdiel, Shawspring Partners, and CAS Investment Partners are already all-time GOATs at this point. The returns are impossible to believe unless you've seen them with your own eyes. Just purely insane.
Yes, they have performed well and the numbers don’t lie because that is real MOIC and IRR. But I will just say 3 things.
1) Beta markets. I bet lots of their investments have been in tech names that are public which have done well. The alpha is not as impressive then. Abdiel is known for concentration. They hold only several names. When you have billions of capital in just a few names, and the market happens to rip for those names, it’s easy to capture a huge % return. This becomes very costly the second there’s a drawdown.
2) Growing pains. They are a small fund to start with. It’s much easier to do well with smaller bases. Look at how the Tiger Cubs have been doing with 5-10x more capital AUM.
3) Sustainability. Sure they have done well but the question is if their investment process and returns will scale as they get more AUM or if the markets don’t rip as much in the future.
I would really love to find good literature on how both hedge funds & PE funds have successfully grown AUM while posting good results.
This aged poorly
Stellar time traveling shop
Easy now! The word stellar can't be used on WSO unless you're describing a stellar distressed shop.
Name rang a bell in my head... turns out I read about them on WhaleWisdom a while ago. Definitely was impressed. According to the article, "Abdiel Capital was #1 among the top performing hedge funds over the last year... with a 123.96% return for the year ending Sept. 30, 2020." These guys have either been super lucky or are seriously onto something.
Those guys at Abdiel FUCK real hard
Uhh, there are a couple ways to interpret this. What exactly do you mean lol
following
So.... what do you guys think about Abidel now that their largest holdings (Appian, Fastly) are down 60% since January??
Those guys at Abdiel are getting FUCKED real hard
How do you know they haven't sold out out of them at higher prices?
Can anyone confirm how much Abdiel cares about valuations? Stuff like FSLY, BILL etc. I find hard to underwrite at their current prices, much less at the 2021 peaks, and they didn't trim much (if at all) last year. I'm sure they are smarter and can see the future better but man I just have such a tough time with the valuations on some of those names.
Or maybe, just maybe, they're not smarter.
their returns suggest otherwise
No I'm pretty sure they're smarter since I'm a retard.
On a more serious note, looking at their 13F from quarter to quarter, they tend not to buy/sell ANY shares in most existing positions over the past year. Instead they've built and added to new positions like CRCT, GLBE etc.
I'm wondering if that's intentional, as if they feel like they own part of the business and they rarely adjust their stake despite changing prices offered them by "Mr. Market" i.e. very purist philosophy.
interviewed with them in undergrad and got GUNNED almost immediately in the first round. Very smart guys and know what they want out of candidates, and make very interesting bets. Lot of respect
What type of questions did they ask you?
oh lol damn I replied to you like 10 min after. Besides stock pitch grilling, did they ask you any specific industry knowledge in tech?
every stock they own is down like 50% YTD
Must be pretty interesting bets tbf
At an info session on campus in 2019 they pumped Shopify and talked about how they don't have Bloombergs at the office. Sounds cool when you're up but nowadays makes them sound like they just rode the tech boom without doing actual analysis. I agree they're smart guys but looks like they got lazy in the past few years.
I would venture that not only is Bloomberg not necessary for "actual analysis", it is perhaps actively detrimental to "actual analysis". By "actual analysis" I mean differentiated work that will get you a real edge.
It's funny to read this comments section. Half the posts are just jerking them off, and the other half saying they're massively overrated. Would be nice to hear from someone in the know (perhaps friends with someone there)?
I agree BBG is mostly a glorified chat function, but to clarify this was part of a broader point that they look beyond the numbers into the character of mgmt etc etc. Spent a lot of time talking about how cool Tobi is as part of their pitch. I do know one of their former interns and he's sharp with good stock picking skills as far as I can tell, so if he learned that at Abdiel I know the analysts there are legit. But then how did they justify putting on some of these positions down 50%+ now with no short book? To me it looks like they fell for their own marketing but we're all on the outside so who knows
they bought CRCT again after dip wtf
Think they "only" bought another 500k shares? Against their 11m shares heading into the quarter, not that much...
Think it’s over 700k but yeah not huge amount but considerable
what do people really mean when they meet "smart" or "sharp" guys in the HF space? Many can talk with high vocabulary and some sector knowledge. Do people mean good stock pitches like stuff on Value Situations (run by a ex special sits guy) or something else?
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Did you push back when he said this? Did he acknowledge your contrary view and explain what backed up his view of the "key differentiator"?
Thanks for this by the way - super high quality post.
Interesting -- if you're open to discussing this in more detail, please DM me.
If anything they were the canary in the coal mine for the great cloud software contraction... their positions got hit earlier than the broader cloud software index so a smarter man than me could have dug in upon early signs...
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