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Atom Investors’ Equity Book Shrinks 40 Percent in the First Quarter

Atom — known for investing in long-short and short-biased hedge funds — attributed the decline to its transition to separately managed accounts.

The equity book of Atom Investors, the multi-manager platform launched by Novus Partners founder Basil Qunibi in 2018, shrank by about 40 percent during the first quarter. Novus Partners provides data and analytics to hedge funds and institutional investors.

The Austin-based firm reported $598 million in U.S. publicly traded equities as of March 31, down from $990 million at the end of the year, according to its 13F filing with the Securities and Exchange Commission.

At the end of the year, Atom’s regulatory assets — which includes short positions — under management were nearly $2.6 billion, the firm disclosed in its 2021 ADV filing.

“The decline in assets reported was related to our fund transitioning from directly-implemented investments to separately managed accounts” in the first quarter, COO John Cunningham told Institutional Investor.   

Atom is known for investing with long-short managers and short-biased funds.

Short positions are not disclosed in hedge funds’ quarterly 13F filings, unless they are implemented using listed put options. But as shorts lost money during the meme-fueled rise of a number of stocks, including GameStop, most long-short hedge funds degrossed — meaning they sold off their long positions as well.

Atom Partners With Short Seller Andrew Left on Research

Atom also has a research relationship with Andrew Left’s Citron Capital, but the firm is not an investor in his hedge fund, according to Left.

“They’re good guys,” Left told II. “By that, I mean they don’t trade around me.”

Last year, Citron’s hedge fund reported net gains of 155 percent, based largely on the fund’s stake in Amazon.

The early part of this year, however, wasn’t great for Left, who decided to throw in the towel on activist short selling after he and his family became a target of members of the Wallstreetbets subreddit for calling out GameStop as a short. Wallstreetbets is a trading discussion group that gained notoriety when its members played a big role in the GameStop short squeeze earlier this year. 

“It was brutal,” Left said, adding that his hedge fund lost around 18 percent during the quarter.

Since the GameStop trading fracas, Left has taken a bullish stance on several obscure, small stocks that appeared in Atom’s latest 13F. 

Among them are LifeMD, which has been a target of short sellers, as have several other of Left’s names in Atom’s portfolio, including Root, an insurance technology company, and XL Fleet, which focuses on electrification for fleet vehicles. 

Some other Left picks in the portfolio Include Lizhi, an online audio entertainment platform, Esports Entertainment Group, and Jumia Technologies.  

Atom uses a quant-driven approach to choosing managers, based in part on the software developed at Novus Partners, where many of its employees previously worked. Atom is also a client of Novus. 

One of Atom’s biggest backers is Future Fund, the Australian sovereign wealth fund, that lists Atom as one of its “alternative risk premia” investments.

Novus and Atom are separate companies but are under the same holding company, according to an individual knowledgeable about the operation.

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