Valiant Capital Management, the hedge fund Hansen runs, posted an 8.7 percent net loss for the first quarter across its holdings, the finance blog Institutional Investor’s Alpha reported Monday.
Chris Hansen has another problem besides the NBA owners and league commissioner David Stern: The hedge fund that positioned him to lead a bid for the Sacramento Kings has lost money for the second consecutive quarter while the stock market soared.
“This means Valiant’s longs lagged the broad market by more than 14 percentage points,” noted the blog, which obtained a copy of Valiant’s private report to its investors.
A big reason for the technology-heavy hedge fund’s quarterly loss is Apple. The Cupertino company was the largest holding — more than 9 percent — of Valiant’s liquid portfolio, meaning the stocks that are easily tradable. Apple shares fell 16.8 percent during the quarter.
“Otherwise, Valiant’s top longs actually fared well,” the blog reported, noting that its next three largest long positions — Google, Liberty Global and Anheuser-Busch InBev — rose 12, 16.6 and 13.8 percent, respectively. Its fifth top holding, Facebook, lost 3 percent.
While Valiant’s U.S. holdings overall were up, it lost big on substantial investments bets in India, and on others in the Middle East, Africa and China.
Among its less easily traded investments, presumably in privately held companies, a notable loss came from a microfinance company called Spandana Sphoorty Financial.
“An initial investment of more than $14.8 million is now worth just $9,710,” the blog reported.
A hedge fund such as Valiant can make a variety of investments. Hansen has said his fund can “short” stocks, expecting to profit when securities decline in value.
That strategy can cause short-term losses in a surging market, and it means the performance of the Valiant portfolio can’t be directly compared to all-long indexes such as the S&P or the global MSCI World Index.
Citing the internal documents, the Alpha blog reported Valiant now manages $2.44 billion, down more than 12 percent from $2.8 billion at year-end.
The blog notes that “despite its recent travails,” the hedge fund Hansen founded “has compounded at better than 13 percent net since its August 2008 inception.”
Hedge fund managers typically receive a management fee of 2 percent of the assets they manage, regardless of how the fund performs; they also receive a share of any profits, usually 20 percent.
Hansen’s personal wealth is undisclosed. Also unknown, as the Alpha blog put it, is “whether his fund’s woes will make it harder for him to follow through with his deal.”