Hedge Fund Updates
Log in to myFT Daily Digest to be the first to know about hedge fund news.
A US hedge fund that made $ 700 million betting on console retailer GameStop has continued its strong run through well-timed positions in rising energy and technology stocks.
The New York-based Senvest Management, which has assets of 3.3 billion, the numbers.
This makes it one of the most powerful hedge funds in the world and increases this year’s profit to around 1.6 billion US dollars.
Senvest’s strong performance was driven by positions in stocks such as Canadian energy companies Paramount Resources and Arc Resources, which have benefited from the surge in oil prices this year, according to a letter to investors in the Financial Times. The Fund declined to comment.
Senvest hit the headlines earlier this year when it was revealed that it had built a more than 5 percent stake in US retailer GameStop late last year, believing negative bets from other hedge funds could potentially be washed away.
In January, retail investors, who frequently coordinated their actions on Reddit, drove GameStop’s price up as much as 2,400 percent during a hectic period of market movement at its peak. This brought huge profits to Senvest, which emerged as one of the biggest winners of the volatile Reddit trading saga, closing January 38 percent and the first quarter 67 percent. Others were not so lucky because funds like Melvin Capital, which had bet on falling prices, suffered enormous losses.
Senvest’s best-performing investments in the second quarter included Paramount Resources, whose shares rose 69 percent in the second quarter, and Arc Resources, which rose 37 percent, aided by an oil price surge of less than US $ 50. Dollars to more than $ 70 this year. It also benefited from a price hike from internet retailer eBay.
Even after such large gains, Mashaal and Gonick believe that “support” [for] the bull market remains intact, ”they wrote in the investor letter. They pointed to unprecedented monetary support from the Federal Reserve, huge fiscal incentives and the introduction of coronavirus vaccines.
More than half of the fund’s bets on rising prices are so-called “go-out” stocks – stocks likely to do well once economies get out of lockdown – like clothing and accessories designer Capri Holdings, owner of the Versace and Jimmy Choo brands.
In the second quarter, Senvest took new short positions – betting on falling prices – with a solar energy provider and a Canadian cannabis company.
The fund gained more than 80 percent by the end of the first half but suffered losses of about 4 percent last month as concerns about the spread of the Delta variant of the coronavirus hit some of the small and medium-sized businesses at low prices. Cap ‘value’ stocks it holds.
The company also remains calm on the rising inflation worries that rocked markets this year. “We believe inflation concerns seem to be more media feed than financial markets suggest,” the company wrote.
“Whether it’s the Delta variant that could put pressure on reopening in the short term, or supply chain constraints that cause prices to spike in the short term, we believe these issues will be resolved over time,” she added.