Philippe Laffont’s Coatue Management has notched up a 52 per cent gain this year thanks to bets on electric carmaker Tesla and against Wirecard, the fraudulent German payments group, making it one of the best-performing big hedge funds in the world in 2020.
Coatue is one of the biggest “long-short” hedge funds, which means it places wagers on some stocks doing well and on other declining, and Mr Laffont is one of the most prominent of the “Tiger cubs” that cut their teeth at Julian Robertson’s hedge fund Tiger Management.
The fund’s focus on technology has served it well in the market mayhem of 2020, as tech stocks have dominated equity market returns. Coatue’s main fund — which manages more than $11bn — has returned 52 per cent net of fees through the end of November, said people familiar with the matter.
Many other big hedge funds have been wrongfooted by the violence of the market slump in March and the power of the rebound since then.
Weighted according to their size, the average hedge fund has lost 4.5 per cent in the year up to the end of October, according to HFR, and equity-focused hedge funds have only returned 3 per cent, despite global stock markets climbing more than 10 per cent.
Tech-focused hedge funds have enjoyed a solid year, returning more than 17 per cent, according to HFR, but Coatue’s performance dwarfs that average.
The hedge fund industry has suffered net investor redemptions of more than $100bn in the first 10 months of the year, according to Eurekahedge, a data provider, about half of which was yanked out of long-short funds.
A person familiar with the matter said Coatue’s large position in Elon Musk’s Tesla has been a big driver given the carmaker’s stock is up nearly 600 per cent this year, in part thanks to its inclusion in the S&P 500 index and the devotion of retail investors. The hedge fund held 3.1m shares at the end of the third quarter, which would now be worth $1.3bn.
Another boon was the implosion of Wirecard, where Coatue had a big short position. The German company fell into insolvency this year after disclosing that €1.9bn in corporate cash was missing. At the start of the year the group’s shares were trading at about €110, but now change hands at barely 50 cents.
Coatue will also have done well from investments in payments group PayPal — up nearly 100 per cent this year — and in the video conferencing business Zoom as well as solar-panel maker Sunrun, which also appear in its recent regulatory disclosures. A large stake in Disney has been a drag on its performance.
Mr Laffont and Coatue declined to comment.
In a rare appearance at an industry conference in 2018, Mr Laffont said: “I truly believe that in every portfolio you need to ask yourself what is going to be more relevant five to 10 years versus today.
“The most interesting trend is that technology, which used to be mostly software and semiconductors and obscure things, it’s coming everywhere, it’s the future of cars and the future of transportation and every sector.”
In addition to its flagship hedge fund, Coatue manages other investment vehicles in areas such as private equity and venture capital, and its overall assets under management are $25bn.
Additional reporting by Ortenca Aliaj and Miles Kruppa