In an investment landscape increasingly dominated by AI-powered strategies and multi-strategy behemoths, one boutique fund is proving that traditional stock-picking can still deliver meaningful returns – provided you know where to look.
Founded in January 2023, Humbucker Management applies a focused relative value approach to internet stocks, a sector the fund’s founder believes is riddled with overlooked inefficiencies. While most managers have expanded their universes to remain competitive, this fund deliberately restricts its focus to just 40 US internet companies.
“I think the whole efficient market hypothesis is completely false,” says the fund’s Founder Sean Kumar, a former Internet Sector Analyst at Macquarie Capital. “Humans are predictable. I look for mistakes – mistakes made by research analysts, mistakes made by investors, and mistakes made by management teams. They happen over and over again.”
The strategy employs a market-neutral approach with approximately 15 positions, split between longs and shorts. What sets the fund apart isn’t just its narrow focus, but its systematic evaluation framework applied across a limited universe of stocks.
“I focus a lot on behavioural finance and the emotions of investing,” explains the manager. “I have a 10-factor framework that I apply to every one of these 40 stocks in exactly the same way. It’s about backdrop, fundamentals, and valuation.”
The approach has delivered positive returns even during turbulent markets, including the recent bout of volatility following tariff announcements. The fund remains uncorrelated to broader market movements while maintaining remarkably low volatility – a particularly attractive proposition for institutional investors seeking diversification.
Finding edges in a digital world
The fund divides the internet sector into two primary buckets: digital media and e-commerce, covering mega caps, online ads, streaming, gaming, mobility/delivery, travel, retailers/marketplaces, web builders, and SMIDs. Within this universe, the manager looks for relative value opportunities where market sentiment has missed fundamental realities.
“A good business and a good stock can sometimes be completely different things,” Kumar notes. “Amazon is fundamentally great, but I’m short and making the bet that other areas of internet have a relatively better risk/reward. I would rather have less exposure to the consumer vs. the advertiser in the current environment.”
This contrarian approach extends to other high-profile names. The fund has maintained a short position on Disney since inception, based on the belief that “Bob Iger could be seen as overrated as CEO” and that “the sell side is biased with Disney. The 5-year chart tells you everything.”
Conversely, the manager identified Uber as a long opportunity when it was trading at approximately two times sales – a valuation the manager considered unjustifiably low for the ridesharing leader with impressive scale, growth, and profitability.
The fund’s thesis on digital advertising illustrates how it translates macro insights into actionable positions.
“I started the year relatively bullish on ads vs. eCommerce. From a macro perspective, my thesis was basically that tariffs would affect consumers slightly more than advertisers. And the revenue growth estimates for both have historically been questionable – every year they magically start around 10% and wiggle up or down. So, if you put that together, you end up liking the revisions outlook in ads better. And stock prices should follow.”
The platform advantage
After operating independently for its first two years, the fund recently joined the Hurricane Capital platform, a move that has enhanced its institutional credibility while preserving investment autonomy.
“Hurricane has been an excellent partner so far. They are supporting me in many ways as I try to transition from small fund to institutional manager. I couldn’t be happier with our relationship.”
This arrangement allows the manager to focus exclusively on stock selection – where he believes his edge truly lies – while benefiting from institutional-grade infrastructure. The manager maintains 100% ownership of the fund and retains control over investment decisions.
For allocators, the Hurricane Capital partnership offers additional reassurance, addressing operational due diligence concerns that might otherwise deter institutional investment in emerging managers.
Scaling without compromise
Unlike many specialist funds that face significant capacity constraints, this strategy can theoretically scale to approximately $2bn without compromising returns, according to the manager’s conservative estimates.
“My strategy focuses on the largest internet names in the US, so it can scale,” the fund founder explains. “I’m in the low eight figures now, but even excluding FAANG stocks, the universe represents around $2tn in market cap.”
The fund maintains roughly equal-weighted positions and rebalances approximately twice monthly. While many managers might be tempted to engage in more frequent trading as assets grow, this manager deliberately avoids overconfidence in timing decisions.
“I’m not a trader. I don’t have an edge on portfolio management,” Kumar admits. “I think my edge is just getting the majority of these stock picks right. I’ve structured it so that as long as I get more than half of the stock picks right, the portfolio should be up. There’s a bit of variance on hit rate vs. slugging there, but it’s still all about stock picking, which I believe is a sport.”
Outlook and opportunities
Looking forward, Humbucker Management sees continued opportunities in the rapidly evolving internet landscape, particularly as AI integration creates new monetisation channels for certain companies.
“AI is better for ads because it helps with measurement and targeting,” Kumar says. “You’re seeing that in Meta’s numbers. Where AI is a bit of a stretch is in areas like travel and e-commerce, where the use case isn’t as clear yet.”
However, he cautions that AI-related capital expenditures are pressuring earnings at mega-cap tech companies, creating a rare environment where these giants are underperforming. “For the first time, the mega-caps are underperforming, and I think it’s partly due to the AI spend, along with the fact that they have absolutely ripped in recent years and we’re seeing some mean reversion.”
For allocators seeking specialised exposure to the internet sector with reduced volatility and low correlation to broader markets, funds like this represent an increasingly rare opportunity – a genuine stock-picker delivering alpha in a sector many assume to be efficient.
“People tell you that markets are efficient, that active managers don’t beat the index,” the manager reflects. “But I’ve been market neutral for almost three years now. Why do these funds exist? Because people are good at stock picking. There’s no reason they would exist otherwise.”
While mega-funds continue to dominate hedge fund flows and startup numbers decline, a quiet revolution is taking place in the industry’s margins. Investors are increasingly hunting specialised managers who can fill precise portfolio gaps – from employee wellness to sustainable living.
These emerging niche strategies aren’t just surviving in the shadow of multi-strategy giants; they’re thriving by targeting unexploited market inefficiencies and emerging secular trends. The series explores how these specialised funds are carving out their space in an industry typically associated with scale, examining their unique value propositions, challenges and the investors backing their vision.
