Hayden Capital, an investment management firm, published its third-quarter 2022 investor letter – a copy of which can be seen here. The portfolio accelerated by 18.9% at the end of the third quarter of 2022, outperforming the 4.9% return of the S&P 500 and the 7.2% return of the MSCI World index. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, Hayden Capital mentioned Sea Limited (NYSE:SE) and explained its insights for the company. Founded in 2009, Sea Limited (NYSE:SE) is a Singapore-based global consumer internet company with a $30.1 billion market capitalization. Sea Limited (NYSE:SE) delivered a -76.00% return since the beginning of the year, while its 12-month returns are down by -74.77%. The stock closed at $53.69 per share on December 12, 2022.
Here is what Hayden Capital has to say about Sea Limited (NYSE:SE) in its Q3 2022 investor letter:
“Sea Limited (NYSE:SE) reported earnings last week, after which the share price rebounded +36% in a single day. The most obvious question that comes to mind, is why didn’t we sell more last year, when prices were still high? The truth is that we did sell a significant amount, but in hindsight obviously wish we were more aggressive with the sales.
For example, we owned the peak number of shares of Sea Ltd in Q1 2020, and steadily trimmed over the next two years. From Q1 2020 to Q1 2022, we trimmed ~39% of our shares over that period. However, the issue was that the investment continued to grow as a percentage of the overall portfolio, since the share price appreciated much faster than our sales (+620% from 1Q20 to 3Q21). This was a similar case for our other long-tenured positions as well.
So why didn’t we trim more aggressively and just hold cash? The answer is that at its core, I believe that holding cash is implicitly a market timing call. I certainly didn’t foresee a likely recession on the horizon so quickly after the turbulence of Covid already had on the economy. Even in late 2021, after it was clear interest rates would start rising, we were still operating under the assumption that rates would cause valuations to compress, but likely wouldn’t have an impact on the overall earnings trajectory. Given our expectations for strong earnings growth, we thought this could more than offset the valuation compression over time, and would still generate strong IRRs over a 3 – 5 year timeframe…” (Click here to see the full text)
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Our calculations show that Sea Limited (NYSE:SE) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Sea Limited (NYSE:SE) was in 55 hedge fund portfolios at the end of the second quarter of 2022, compared to 65 funds in the previous quarter. Sea Limited (NYSE:SE) delivered a -9.02% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on Sea Limited (NYSE:SE) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
