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Asset/Investment Management
whalerockcapital.com

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Investments

27

Portfolio Exits

3

About Whale Rock Capital Management

Whale Rock Capital Management

Whale Rock Capital Management Headquarter Location

Boston, Massachusetts,

United States

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Latest Whale Rock Capital Management News

Smart Money Watch: Equity hedge funds suffer historic declines in first five months of 2022

Jun 15, 2022

Shifting market dynamics create 'existential crisis' for some stock strategies Author of the article: Article content This is shaping up to be the worst year for equity hedge funds on record, in a sign they are struggling to adjust to a dramatic change in market conditions. Advertisement 2 Article content Try refreshing your browser, or Smart Money Watch: Equity hedge funds suffer historic declines in first five months of 2022 Back to video Equity hedge funds, which manage around US$1.2 trillion in assets, lost eight per cent on average in the first five months of 2022, according to data group Hedge Fund Research Inc. (HFR). This outstrips losses in other years marked by crisis, on HFR data going back some 32 years, and leaves funds with a huge task to recoup losses over the rest of 2022. The opening five months of 2020, which brought a huge drop in stocks followed by a volatile recovery, left funds down 5.8 per cent. Article content Equity hedge funds are “generally having a really difficult time, it feels worse for that strategy than in 2008,” said Anthony Scaramucci, founder of New York-based investment firm SkyBridge Capital II LLC. This year’s losses are milder than the 12.8 per cent fall in the benchmark S&P 500 index, including dividends. But the supposed investment acumen of the sharpest investors in the market is still leaving holders in a hole. Advertisement 3 Article content Such heavy losses at hedge funds can easily become self-fulfilling. As big funds take losses, and customers ask for their money back, often they are forced to sell holdings, regardless of whether those bets are performing well. This can contribute to volatility and deepen market declines. The losses among equity funds stand in stark contrast to the performance of much of the rest of the US$4-trillion hedge fund industry. Computer-driven funds betting on market trends and macro managers trading interest rate and currency moves are among those reaping large gains this year. But in equities, many funds have suffered from a vicious selloff in high-growth tech stocks, as central banks move to tighten monetary policy. Such companies’ projected earnings were flattered by ultra-low borrowing costs, but have lost appeal as the United States Federal Reserve and international peers raise interest rates to curb inflation. Advertisement 4 Article content A Goldman Sachs Group Inc. “VIP” index of favourite equity positions taken by hedge funds is down 23 per cent this year. Among those suffering losses have been Chase Coleman, a high-profile so-called “Tiger cub” and protégé of Tiger Management Corp. founder Julian Robertson. Coleman has now lost 52 per cent in his Tiger Global fund this year, said a person who had seen the numbers. Fellow Tiger cub Lee Ainslie, who now runs Maverick Capital Ltd., is down more than 34 per cent. Dan Loeb’s US$7.1-billion Third Point Offshore Investors Ltd. funds have lost around 14 per cent while his leveraged US$2.9-billion Ultra fund has fallen 18.4 per cent, according to documents sent to investors. Boston-based Whale Rock Capital Management LLC, which focuses on tech, media and telecoms, has lost 33.8 per cent in its portfolio containing both listed and private investments. Advertisement 5 Article content Tiger Global, Maverick and Whale Rock declined to comment. Third Point did not respond to a request for comment. Long-short equity hedge funds take bets that individual stocks will either rise or fall in price. However, because stock markets tend to rise over the longer term, the funds often give greater weight to bets on rising prices — so-called “longs” — than on falling prices, known as “shorts.” During the protracted bull market of recent years, which was turbocharged during the pandemic as central banks and governments injected massive stimulus into markets and the economy, funds found it far easier to hold long positions than shorts. Even longtime investors are wondering why they're paying managers high fees while bearing all the risk Andrew Beer That stance was profitable when markets were rising. But now some funds have been left badly exposed as growth stocks have entered a bear market, adding to concerns about managers’ ability to protect investors’ cash during tough times. Advertisement 6 Article content “Equity long-short is facing an existential crisis: stock selection has been poor, shorting doesn’t work and people jumped off the tracks after the train already hit,” said Andrew Beer, managing member at U.S. investment firm Dynamic Beta Investments LLC. “Even longtime investors are wondering why they’re paying managers high fees while bearing all the risk.” Investors pulled US$9.8-billion from long-short equity funds during the first three months of this year, according to data group eVestment LLC. Among other equity funds hit this year is New York-based Select Equity Group LP, which lost more than 11 per cent across two portfolios that in total manage around US$10-billion in assets. More On This Topic Article content New York-based North Peak Capital Management LLC is down more than 28 per cent, and the Brummer & Partners Manticore fund is down around 13 per cent this year, according to numbers sent to investors. SEG, North Peak and Contour, which manages the Brummer fund, did not respond to a request for comment. Funds betting on U.S. equities cut the difference between their long positions and their short positions to close to its lowest since 2010 last month, according to a client note from Morgan Stanley prime brokerage, in a sign of caution, although they have been building this up again in recent weeks. Not all equity managers are struggling. James Hanbury at London-based Odey Asset Management LLP has gained 8.1 per cent in his LF Brook Absolute Return fund this year, despite holding positions in Russia that were written down to zero or near zero, according to investor documentation seen by the Financial Times. Hanbury has been helped by positions in the energy sector and a bet against former meme stock favourite AMC Entertainment Holdings Inc. Odey declined to comment.

Whale Rock Capital Management Investments

27 Investments

Whale Rock Capital Management has made 27 investments. Their latest investment was in Flash as part of their Series C on March 3, 2022.

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Whale Rock Capital Management Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

3/9/2022

Series C

Flash

$100M

Yes

8

2/17/2022

Series C - II

Fenbeitong

$140M

Yes

11

2/16/2022

Series D

CelLink

$250M

Yes

8

2/16/2022

Series D

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$99M

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10

2/11/2022

Series D

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$99M

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10

Date

3/9/2022

2/17/2022

2/16/2022

2/16/2022

2/11/2022

Round

Series C

Series C - II

Series D

Series D

Series D

Company

Flash

Fenbeitong

CelLink

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Amount

$100M

$140M

$250M

$99M

$99M

New?

Yes

Yes

Yes

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Co-Investors

Sources

8

11

8

10

10

Whale Rock Capital Management Portfolio Exits

3 Portfolio Exits

Whale Rock Capital Management has 3 portfolio exits. Their latest portfolio exit was Nubank on December 09, 2021.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

12/9/2021

IPO

$99M

Public

11

5/6/2021

Acquired

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$99M

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10

8/14/2020

IPO

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$99M

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10

Date

12/9/2021

5/6/2021

8/14/2020

Exit

IPO

Acquired

IPO

Companies

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Valuation

$99M

$99M

$99M

Acquirer

Public

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Sources

11

10

10

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