Josh Resnick’s Jericho Capital Asset Management suffered a sharp setback in October as the stock market tumbled, according to a person with knowledge of the performance.
The firm’s main hedge fund, Jericho Capital Partners, lost 6 percent last month, the person said, asking not to be identified because the information is private. Still, the performance was not as bad as the tech-heavy Nasdaq, which lost about 9 percent, and the S&P 500, which was down about 7 percent.
More importantly, Jericho, which manages more than $2 billion, is still up 10 percent for the year, the person said. The hedge fund firm has outperformed the S&P 500, which was up 1.4 percent this year through October.
Meanwhile, two of its most high-profile positions—one long and one short—have been moving in a favorable direction for Jericho in recent days, according to the person.
Jericho, which launched in 2009, declined to comment.
The firm's second largest long position is in cloud computing company VMware, according to a regulatory filing. VMware is more than 80 percent owned by Dell Technologies, which acquired this stake in 2016 when it bought EMC.
Dell, which is private, is locked in a high-profile battle to acquire all of the shares of DVMT, an affiliate that tracks Dell’s stake in VMware. Carl Icahn, who owns 8.3 percent of DVMT, opposes the deal at its current price.
“While we have unearthed many undervalued opportunities in the past, very few companies compare to the current opportunity and the massive undervaluation of DVMT — which exists in plain sight for all to see,” Icahn wrote in an October 15 letter to DVMT shareholders.
In March, Jericho sent a letter to the board of directors of VMware raising concerns about Dell possibly making a bid for a reverse merger. In the second quarter, Jericho boosted its stake in VMware by about 35 percent to 2.46 million shares, according to the regulatory filing.
VMware's stock is up about 20 percent since Jericho's March 12 letter, with the company's shares largely rebounding from the broad selloff in the equities market in October.
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Meanwhile, shares of Jericho’s best known short, Frontier Communications Corp., have tumbled. The company's stock fell 1.2 percent Thursday to $4, down about 65 percent from this year's May peak of $11.34.
In his May 2017 presentation at the Sohn Investment Conference in New York, Resnick predicted the telecom company would go bankrupt. Before his talk, the debt-laden company’s stock closed at $20.61.
Last year, Resnick’s flagship Jericho Capital Partners was up 25 percent, according to the person with knowledge of the firm's performance. Jericho Capital Special Opportunities, which takes much more concentrated positions in a handful of stocks, was up 47 percent, the person said.
Other key Jericho longs are also surging since the stock market recently bottomed. NXP Semiconductors, its largest long, has jumped about 20 percent since October 29.
The semiconductor giant recently reported third-quarter results that beat Wall Street estimates, and issued fourth-quarter earnings-per-share guidance that is above consensus estimates. In the third quarter, NXP also repurchased $4.6 billion of its shares.
NXP was one among 10 new long positions established by Jericho in the second quarter, or nearly half of its 22 long positions at the end of the period, according to the regulatory filing. Another of the firm's top holdings, Chinese social media company Momo, is up about 16 percent from its October 29 low.
