Light Street Capital Management suffered a setback in February — a rough month for tech stocks in general. The Tiger Cub headed by Glen Kacher lost 2.45 percent, says someone who has seen the results. This compares with a 3.4 percent decline for the tech-heavy Nasdaq Composite.
For the year, Light Street remains in the black, up a solid 2 percent compared with a 2.5 percent decline for the Nasdaq. Performance for its long-only fund is unavailable because it is going through a transition.
Institutional Investor previously reported Light Street has launched a new long-only fund and shuttered its existing one. Kacher told clients in its fourth-quarter letter that Light Street Focus is a concentrated long-only fund seeking to use the duration of capital to avail itself of opportunities created by innovation in the technology sector.
Stock markets have changed significantly over the last 15 years: Passive strategies continue to grow and assets have become more concentrated in multimanager platforms. According to the letter, this has created greater volatility in individual stocks, which can cause long-term quality companies to be mispriced. The firm argues that these conditions favor fundamental stock pickers and create an opportunity for patient investors to take advantage of the market’s growing focus on the short term.
II also reported that Light Street is adapting to a changing technology investment climate, noting that since its 2010 launch, mobile, social, cloud computing, and e-commerce have fueled innovation and strong gains on the hedge fund’s long positions and “caused significant disruption for companies it shorted.”
It continued: “As the far-reaching implications of AI have continued to evolve, the formation of AI-driven economic opportunity is clearer to us than ever. AI as a supercycle is here to stay. As a result, we have redesigned our 15-year-old construct, implementing a new thematic framework that better aligns with the direction of the technology sector as we see it.”
Light Street currently emphasizes five areas: infrastructure; cloud service platforms; data platforms; application and distribution; and automation, robotics, and space. [WM(2]
In the fourth quarter, Taiwan Semiconductor Manufacturing remained the top U.S.-listed long for the fourth straight quarter, accounting for more than 12 percent of U.S. assets, according to the latest 13F quarterly filing.
Financial technology company Chime Financial moved up to the second spot after Light Street boosted its stake by more than 80 percent. It displaced previous No. 2 Nvidia, now the third-largest long.
Also in the fourth quarter, Light Street established three new midsize positions — in social media company Reddit; Netflix; and Amplitude, which develops digital analytics software.
And in the same quarter, Light Street fully liquidated four sizable positions it had initiated in the previous quarter: software company Datadog, formerly the ninth-largest long; cloud-based data platform company Snowflake; software company MongoDB; and Chinese e-commerce giant Alibaba Group.
