Philippe Laffont, founder of hedge-fund firm Coatue Management LLC, plans to return as much as 35 percent of the money in his main $7 billion fund.
Investors in the fund will receive the money at the end of June, according to a letter to clients that didn’t give an exact amount of cash to be returned. Laffont said the right size for the fund is $5 billion.
Coatue was among the hedge-fund firms that invested heavily in technology shares, which slumped in the first quarter as popular holdings such as online retailer Amazon.com Inc. tumbled 16 percent. Laffont, 46, said his firm has cut its gross and net exposure to near historic lows after losing 9 percent in March.
“The move was as sudden and deep as some of the gut-wrecking dislocations of 2000-2002 and 2008-2009,” he said in the letter, contents of which were reported earlier by CNBC. “We are not smart enough to know if this rotation is just a pullback or will lead to a deeper and more protracted correction.”
Laffont said that stocks his firm was expecting to rise fell as much as 10 times more than the broader market.
Technology companies in the Standard & Poor’s 500 Index (SPX) sank 2.2 percent in the second week of March, the worst weekly decline since June. Facebook Inc. slumped 12 percent last month, Baidu Inc. fell 11 percent while Google Inc. tumbled 8 percent. Hedge funds posted gains of 0.7 percent last month and 1.4 percent for the first quarter, according to data compiled by Bloomberg.
Technology stocks have extended their decline this month. The technology-heavy Nasdaq 100 (CCMP) tumbled 4.3 percent in the three days through yesterday, the most since 2011.
Laffont worked for Julian Robertson at Tiger Management LLC before starting his New York-based long-short equity hedge fund in 1999, which can bet on or against stocks.
Net exposure is calculated by subtracting the percentage of a hedge fund’s short positions, or bets on falling securities, from its long holdings, or wagers on rising stocks and bonds.
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