In this article, we discuss 5 hedge funds that the economic recession is crushing. If you want to read about some more hedge funds that the economic recession is crushing, go directly to Economic Recession is Crushing These 10 Hedge Funds.
5. Whale Rock Capital Management
YTD Loss as of May 2022: 33%
Whale Rock Capital Management is an investment firm that operates from Boston. At the end of March 2022, the firm had a portfolio value of more than $8 billion with investments concentrated in the technology sector. Financial Times reports that the fund, which has huge stakes in sectors such as media, telecommunications, and tech, was down 33% at the end of May 2022. The fund, which employs a long/short equity strategy, started facing huge losses from late 2021. The fund had ended 2020 with returns of over 71%, with 86% of this coming from long-only bets.
Alex Sacerdote of Whale Rock Capital Management
Whale Rock Capital Management has invested heavily in Alphabet Inc. (NASDAQ:GOOG), a California-based technology firm. Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG), with 2.3 million shares worth more than $6.6 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
4. RTW Investments LLC
YTD Loss as of May 2022: 34%
RTW Investments LLC is an investment management company based in New York. It is one of the premier funds on Wall Street that focuses solely on investments in biotech firms. RTW Flagship Fund, one of the elite offerings of the investment firm, was down close to double-digits at the end of May 2022, per Reuters news agency. Investments in the biotech sector overall have nosedived in recent months amid rising inflation and the prospect of a looming recession, which has forced investors towards value stocks with established business models.
A top holding of RTW Investments LLC is Thermo Fisher Scientific Inc. (NYSE:TMO), a firm that markets analytical instruments, specialty diagnostics, and laboratory products. At the end of the first quarter of 2022, 101 hedge funds in the database of Insider Monkey held stakes worth $7.9 billion in Thermo Fisher Scientific Inc. (NYSE:TMO), up from 96 in the preceding quarter worth $9.4 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Thermo Fisher Scientific Inc. (NYSE:TMO) was one of them. Here is what the fund said:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of Thermo Fisher Scientific Inc. (NYSE:TMO), a leading health care tools company, a leading provider of fertility benefit management services to self-insured employers that offers a rare win-win-win for employers, employees, health systems, and doctors, with clear savings and quality improvements.”
3. Maverick Capital
YTD Loss as of May 2022: 34%
Maverick Capital is a hedge fund based in Texas. It is led by Lee Ainslie, a Virginia-born investor with a personal net worth in the tens of millions. The portfolio value of the fund, at the end of the first quarter of 2022, was around $5 billion. In a letter to investors, Ainslie has acknowledged the losses faced by his fund, noting that a sizeable position in Korean firm Coupang, the broad decline in high-growth and mega-cap tech stocks, and the tumble in the biotech sector as some of the reasons behind the record losses for his firm.
Maverick Capital has invested a lot of money in Amazon.com, Inc. (NASDAQ:AMZN), a diversified technology firm with core interests in ecommerce. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN), with 4 million shares worth more than $13 billion.
In its Q4 2021 investor letter, Mercator International, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Transformative technologies often generate euphoria. People are excited by the big new thing that is changing the world. We saw this pattern with the boom of westward canal transportation at the dawn of the nineteenth century. Railway stocks similarly attracted large numbers of eager investors a few decades later. Then came the electrification of America, the telephone, and the automobile industry, to name just a few transformative technologies.
The initial euphoric phase always ends with a reality check. Valuations come back to earth. At the end of the cycle, only a few companies remain standing. A shakeout has a way of clarifying the field of opportunities.
For example, readers may recall that when the internet bubble burst two decades ago, Amazon.com, Inc. (NASDAQ:AMZN) stock suffered greatly but pet.com was gone. For those investors who had stayed on the sidelines, this was an excellent time to buy Amazon.com, Inc. (NASDAQ:AMZN). The company’s business model had shown its merits and competition was rapidly shrinking. The stock price was now also much more attractive.”
2. Perceptive Advisors
YTD Loss as of May 2022: 41%
Perceptive Advisors is a private equity firm based in New York. It was managed by Joseph Edelman, an investor with a net worth of close to $3 billion. Financial Times claims that the fund lost close to 20% in value in just the month of May this year as recession fears lead to a mass exodus from biotech stocks, one of the core investment sectors of Perceptive. In 2021, the fund posted a negative return of 28%, the worst performance on record since it was founded over two decades ago.
Perceptive Advisors holds a large stake in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), a clinical-stage biotech firm focusing on developing therapies for cancer patients. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Perceptive Advisors is a leading shareholder in Iovance Biotherapeutics, Inc. (NASDAQ: IOVA), with 12.2 million shares worth more than $203 million.
1. Tiger Global Management LLC
YTD Loss as of May 2022: 52%
Tiger Global Management LLC was one of the most high-profile casualties of the recession fears of 2022. The fund, based in New York and chaired by Chase Coleman, lost 14% in May alone amid the selloff in the tech sector. In an investor letter, the hedge fund said that the public fund performance was “deeply frustrating” since the business was “set up with duration to weather storms when they arise”. Tiger Global has refused to buckle despite pressure, doubling down on tech-related bets amid the selloff.
One of the top holdings of Tiger Global Management LLC is Microsoft Corporation (NASDAQ:MSFT), a Washington-based technology firm. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT), with 27.8 million shares worth more than $8.5 billion.
In its Q1 2022 investor letter, Carillon Tower Advisers, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft Corporation (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
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