{"id":35773,"date":"2022-06-04T00:08:29","date_gmt":"2022-06-04T00:08:29","guid":{"rendered":"https:\/\/harchi90.com\/coatue-is-down-17-it-boosted-cash-exposure-to-80-to-stem-losses\/"},"modified":"2022-06-04T00:08:29","modified_gmt":"2022-06-04T00:08:29","slug":"coatue-is-down-17-it-boosted-cash-exposure-to-80-to-stem-losses","status":"publish","type":"post","link":"https:\/\/harchi90.com\/coatue-is-down-17-it-boosted-cash-exposure-to-80-to-stem-losses\/","title":{"rendered":"Coatue Is Down -17%.  It Boosted Cash Exposure to 80% to Stem Losses"},"content":{"rendered":"<div>\n<ul class=\"summary-list\">\n<li>Coatue liquidated positions and moved to 80% cash during the recent market selloff, according to an investor presentation from May.<\/li>\n<li>The fund is down 17% this year &#8211; better than rival tech hedge funds &#8211; and its short book is up 32%. <\/li>\n<li>Founder Phillipe Laffont is well known for quickly cutting positions amid market turbulence. <\/li>\n<\/ul>\n<p>Like most so-called Tiger Cubs, the tech-focused hedge fund Coatue has lost significant money this year. <\/p>\n<p>But it has fared better than rivals, thanks in part to founder Philippe Laffont&#8217;s longstanding propensity to slash exposure and build up piles of cash during market turbulence, according to sources familiar with the fund and a recent investor presentation.<\/p>\n<p>Coatue would be down as much as 40% through May had it held on to its positions from the start of January &#8211; losses that would put it in league with the likes of Melvin Capital and Tiger Global.  Instead, Coatue is down just 17% for the year, according to the mid-May investor update. <\/p>\n<p>Coatue&#8217;s portfolio was buoyed by strong short performance, but also a dramatic liquidation of its positions.  The fund&#8217;s portfolio stands at more than 80% cash &#8211; an enormous allocation that outstrips the amount of greenbacks it hoarded during the Great Financial Crisis or the Covid-19 selloff in 2020. <\/p>\n<p>A spokesman for Coatue, which managed $ 59 billion at the end of 2021, declined to comment. <\/p>\n<p>While double-digit losses are nothing to celebrate, the firm&#8217;s performance amid the market sell-off this year has outpaced other tech hedge funds as well as the Nasdaq Composite Index, the tech benchmark that has fallen 24% this year. <\/p>\n<p>Tiger Global is down 52% for the year, Bloomberg reported Thursday.  Melvin Capital is shuttering operations after posting extensive losses in the first five months of the year on top of a dismal 39% decline in 2021. <\/p>\n<p>Other hedge funds with a technology focus, like D1 Capital, Lone Pine, and Whale Rock, have also suffered.  Viking Global was the rare marquee Tiger Cub, the name given to hedge funds spawned from Julian Robertson&#8217;s Tiger Management, with single-digit losses through April. <\/p>\n<p>Coatue&#8217;s long bets, including DoorDash, <\/p>\n<p>                        <span class=\"component rich-tooltip reference-autolinker no-help\" data-component-type=\"reference-autolinker\"><br \/>\n                          Netflix<br \/>\n                          <span style=\"font-size: 0px;\"\/><br \/>\n                        <\/span>, and Peloton, have gotten smoked as well, losing 45%.  The fund wasn&#8217;t fast enough to recognize the abrupt shift in investor sentiment away from growth stocks that surged during the pandemic, according to the investor update. <\/p>\n<p>Strong performance from its short book, which was up 32%, helped mitigate the pain. <\/p>\n<p>Coatue also benefitted from founder Philippe Laffont&#8217;s penchant for turning to cash in a crisis.  Sources familiar with Laffont&#8217;s management said he&#8217;s known for liquidating positions when markets get choppy.<\/p>\n<p>&#8220;Whenever things aren&#8217;t ripping, he cuts,&#8221; a former employee said. <\/p>\n<p>That was born out in the investor update, which revealed the fund had its greatest allocation to cash since the Dotcom bubble in 2000, when cash exposure ranged from 40% to 80%.  During the market meltdown in 2008 and 2009, cash topped out at 60%, and during the early days of the pandemic, cash stood at more than 20%. <\/p>\n<p>To be sure, Coatue wasn&#8217;t the only tech-focused cutting positions &#8211; the tech-stock swoon contributed to a flurry of first-quarter selling among Tiger Cubs, according to data from the Securities and Exchange Commission compiled by Bloomberg.<\/p>\n<p>But Coatue&#8217;s approach has shielded it from the worst of the carnage. <\/p>\n<h2>Preparing to play offense<\/h2>\n<p>The fund is now preparing when and how to redeploy its staggering cash pile, according to the presentation.  It&#8217;s bullish on opportunities in structured equity, which has performed well during bear markets &#8211; companies need cash but don&#8217;t want to sell equity at beaten down prices.  Anchor investors have committed more than $ 1.2 billion for a new fund dedicated to structured equity and is targeting $ 2 billion, according to the investor update. <\/p>\n<p>Coatue is also cobbling together a wish list of 40 stocks it&#8217;s keen to buy if the price is right, the presentation said.  In Laffont&#8217;s view, the broad market selloff has unfairly hit some profitable tech stocks &#8211; &#8220;babies get thrown out with the bath water&#8221; &#8211; priming them for a stronger rebound eventually. <\/p>\n<p>But Laffont told investors the market likely has further to fall before many of them become attractive &#8211; potentially another 20%. <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Coatue liquidated positions and moved to 80% cash during the recent market selloff, according to an investor presentation from May. The fund is down 17% this year &#8211; better than rival tech hedge funds &#8211; and its short book is up 32%. Founder Phillipe Laffont is well known for quickly cutting positions amid market turbulence. &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/harchi90.com\/coatue-is-down-17-it-boosted-cash-exposure-to-80-to-stem-losses\/\"> <span class=\"screen-reader-text\">Coatue Is Down -17%.  It Boosted Cash Exposure to 80% to Stem Losses<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[8],"tags":[],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/i.insider.com\/5eece665988ee33a7752b803?width=1200&format=jpeg","_links":{"self":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/35773"}],"collection":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/comments?post=35773"}],"version-history":[{"count":0,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/35773\/revisions"}],"wp:attachment":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/media?parent=35773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/categories?post=35773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/tags?post=35773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}