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Hedge Funds’ Private Investments, Revealed

Several of the high-profile private companies that have recently gone public play major roles in the portfolios of firms best known for their hedge funds.

The magnitude of hedge funds’ private investments has started to become clear.

Over the past few years, a number of hedge funds have made a slew of investments in technology, internet, media, biopharma, and other private companies. Several graduated to become unicorns, valued in the private market at more than $1 billion.

Many of these companies have now gone public.

While outsiders might be aware of private investments made by hedge funds, the magnitude of the bets and their role in the overall portfolio typically aren’t clear until the companies go public. Since the second quarter 13F filing is a snap shot of portfolios on June 30, it’s also not clear whether firms bought additional shares after the IPO.

So, it was interesting to see in the recent 13F filings of  U.S. stock holdings that several of the private companies that went public during the three-month period are currently significant holdings for firms most known for their hedge funds.

There is no way of knowing which of the firms’ many funds actually hold the position. In some cases, they have a venture capital arm that made the initial investment  and now holds the public shares.

This was the case with last year’s second quarter 13F filings when Tiger Global Management reported that Spotify was its largest U.S. long position. However, most of the shares in the streaming music company were held at the time by Tiger Global’s venture capital funds, which bought the shares when the company was still private. 

[II Deep Dive: The Truth About Tiger Global’s Spotify Stake]

In the most recent round of 13F filings, Light Street Capital Management disclosed that three unicorns that went public during the second quarter ranked among its five largest long bets.

These included Slack Technologies, its largest position, Uber Technologies, which ranked third, and Pinterest, the fifth-largest.

In addition, Lyft, which went public at the end of March, is currently Light Street’s seventh largest long after the firm more than doubled its stake in the public markets in the second quarter.

Institutional Investor previously reported that Light Street Capital’s private late-stage growth equity fund, Light Street Beacon I, had funded two deals, Slack Technologies and Pinterest, shortly after its first close in mid-January.

II also recently reported that two biopharma companies that went public in late June are now major positions of O. Andreas Halvorsen’s Viking Global Investors.

Adaptive Biotechnologies is the firm’s largest U.S. long position. Most of the Adaptive investment is held by Viking Global Equities and Viking Long Fund, according to a Viking investor.

BridgeBio Pharma is now Viking’s twelfth-largest long. It is held by Viking Global Opportunities, the firm’s hybrid fund, which made the investment in the company before it went public, according to the investor. 

Richard Gerson’s Falcon Edge Capital, meanwhile, continues to count Lyft as its largest position. The ride hailing company went public on March 29, the end of the first quarter. The stock was the hedge fund’s largest position at the end of the first quarter, with more than 7.7 million shares, and it remained the firm’s largest long at the end of June with the same exact position.

Falcon Edge’s hedge funds, Falcon Edge Global L.P. and its offshore equivalent, invest in both public and private securities. The firm also has a venture capital business.

Interestingly, Coatue Management reported that its stake in Uber was valued at nearly half of a billion dollars at the end of the quarter. However, it was only large enough to rank as the firm’s eleventh largest U.S. common stock long.

Uber only ranked number 17 in Tiger Global’s U.S. equity portfolio. 

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