Meet The Ex-Professional Tennis Player Whose Hedge Fund Soared 124% In 2019
SoftBank was the butt of many jokes in 2019. in fact, it’s likely the bank will remain the butt of many jokes heading into the new year.
But despite the bank’s well known embarrassing failures during 2019, namely the botched IPO of WeWork, the bank did have one thing going for it this year. One of its executives, Marcelo Claure, backed a $160 million hedge fund that surged 124% last year, according to Bloomberg.
The fund smoked the S&P index and stood out at one of the lone beacons of success related to anything having to do with SoftBank.
DPM started in 2017 with personal backing from Claure, who had a stake in at least 20% of the firm. The founder of the firm, Pedro Escudero, is a former pro tennis player who has worked on several shops across Wall Street. Most recently, he worked in sales and marketing for Latin America on behalf of J.P. Morgan.
In keeping with the SoftBank ethos, the fund says it invests in companies that are “unique species” and have adapted their price models to survive intense competition. DPM said 95% of the positions it took or held at the start of last year has positive results for 2019. The fund is up 49% since its October 2017 inception, versus 34% for the S&P 500.
Escudero said in his investor letter: “We need to understand exactly where in a business’s story we stand — are things just about to get good, or is it headed for a swift decline? — before we invest.”
His letter also says he’s using bearish wagers only as a hedge. “Absent signs of an imminent recession, we believe our time is better spent on longs,” his letter says.
He also said that the hedge fund industry’s track record over the past decade is “embarrassing” and that if DPM doesn’t beat the S&P, it’s “just another hedge fund”.
We’ll check back in on Escudero and Claure in a couple of quarter to see if the magic still exists…