As global markets tumbled in mid-July, some of the world’s largest equity hedge funds, including Light Street Capital Management, Pershing Square Capital Management, suffered significant losses, having invested heavily in popular tech company stocks that led the downturn, according to a report by Bloomberg.
The report cites unnamed sources as highlighting that prominent hedge funds like Glen Kacher’s Light Street Capital Management hedge fund declined by 9.2%, while Pershing, which holds just 13 long positions, dropped by 4.7%.
Philippe Laffont’s Coatue Management fell by 3.6%, while Tiger Global Management saw a 1.9% loss. Viking Global Investors meanwhile, which has fewer tech investments than its peers, remained relatively stable.
Key tech stocks, including AI leader Nvidia Corp, Facebook parent Meta Platforms Inc, and Amazon.com, were sold off in July. This week saw an even steeper decline, with the tech-heavy Nasdaq 100 dropping 3% and the VIX reaching its highest level since March 2020.
While many stock-pickers struggled, David Einhorn’s Greenlight Capital and Jim Simons’ Renaissance Technologies defied the trend, each gaining at least 2% last month.
Multi-strategy funds meanwhile, which trade across various asset classes, weathered the market volatility relatively well, posting gains or losses of less than 1%.
After the carnage which continued into August and saw markets tumble on Monday, stocks rallied on Tuesday as investors, including hedge funds took advantage of lower prices by “buying the dip”.
According to a report by Reuters, a note from Goldman Sachs revealed that global hedge funds embarked on the largest one-day buying spree in five months, adding long positions mainly in information technology, on a day the sector index was down 3.78%.
“Nearly all tech subsectors were net bought on Monday (sans tech hardware), led by semis & semi equipment and software,” Goldman Vice President Vincent Lin said in the note.
They also went bargain hunting in healthcare, staples and utilities, but sold stocks in consumer discretionary, real estate and financials.
