Light Street Hedge Fund Jumps 43% Topping Tiger Cubs With Tech

  • Glen Kacher’s investment firm said to return 11% in May
  • Bets on Momo, Shopify, Square, Amazon, Tencent led to gains

Light Street Capital Management, the $1.1 billion hedge fund founded by Tiger Cub Glen Kacher, gained 42.6 percent in the first five months of the year on technology bets.

Light Street’s flagship fund rose 11 percent in May, according to a person familiar with the matter. Wagers on e-commerce firms Shopify Inc., Square Inc. and Amazon.com Inc. as well as China’s Tencent Holdings Ltd. and Momo Inc., a social media company, contributed to returns, the person said.

The hedge fund, which focuses on telecommunications, media and technology stocks, is one of a handful to outperform the market in tech stocks this year. The S&P 500 Information Technology Index has increased 19.7 percent in 2017 through May before retreating in June on concerns that tech stocks have risen too high too quickly.

Kacher’s seven-year-old fund also leads other Tiger Cubs -- managers who once worked at Julian Robertson’s Tiger Management -- that wager on tech. Chase Coleman’s Tiger Global Management rose about 23 percent this year after returning 4.7 percent in May, led by bets on Priceline Group Inc., Alibaba.com and Amazon, according to a person familiar with the matter.

The flagship fund at Viking Global Investors, run by Tiger Management veteran Andreas Halvorsen, is up 7.1 percent this year after a flat May, according to another person familiar with the matter. The firm is returning about $8 billion to investors as Chief Investment Officer Daniel Sundheim departs to pursue his own business interests.

Tiger Cubs Get Hot

FirmMay Return (%)YTD Return (%)
Light Street1142.6
Tiger Global Management4.723
Coatue Management3.217.9
White Elm Capital*2.216
Viking Global Investors07.1

*Firm founded by an alumnus of Tiger Cub Lone
Pine Capital. Sources: People familiar

Spokeswomen for the funds declined to comment.

Powering Small Business

Light Street, which is based in Palo Alto, California, is seeing revenue and profit growth at technology companies that enable small- and medium-sized businesses to compete against larger rivals, said Kacher, who declined to comment on his performance specifically. The firm is invested in stocks such as Shopify, WIX.com Ltd. and Stamps.com that are powering these smaller businesses, he said.

"Shopify has created this platform that puts small businesses on equal footing with Amazon, Neiman Marcus or Nordstrom, which is incredibly powerful because those small businesses couldn’t do it on their own," Kacher said in a June 7 interview.

Read more: Tech-focused Light Street Capital is bullish on Momo, Shopify

Light Street, whose performance was also driven by tech giants like Facebook Inc., also made money on its shorts. The firm wagered against a handful of names on the losing side of the shift in smartphone screens to OLED, or organic light-emitting diode technology, from LCDs, or liquid-crystal displays, said Kacher, who worked as an analyst at Tiger Management in the 1990s. Light Street is also short the retail sector, including department stores and apparel companies.

The hedge fund anticipates closing its flagship strategy to new investors at the end of the fourth quarter, the person said.

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