Altimeter Alumnus in Lockdown Bets Crisis Will Change Consumers

(Bloomberg) -- Ram Parameswaran didn’t expect to be opening his hedge fund during a global pandemic.

The former partner at Silicon Valley hedge fund Altimeter Capital is going solo at a time when the coronavirus is roiling markets and upending businesses. But after leading investments in Alibaba Group Holding Ltd. and TikTok owner Bytedance Inc., he says he’s well placed to capitalize on the seismic shifts taking place in the way people work, shop and live.

His fund, Octahedron, started on April 1 with $35 million from venture capitalists and technology executives from the U.S. and China, and will invest in public and unlisted internet companies, according to people familiar with the matter, who asked not to be identified because the details are private.

Brad Gerstner, Altimeter’s founder and chief executive officer, is one of Octahedron’s seed investors, and Morgan Stanley is the fund’s prime broker.

“This crisis will create sea changes in consumer and business behavior,” Parameswaran said. “The gig economy will explode,” he added, pointing to grocery-delivery startup Instacart’s record orders and Amazon Inc.’s plan to hire 100,000 workers in the U.S.

During his time at Altimeter, Parameswaran also led investments in companies including Facebook Inc. and Pinduoduo Inc.

While it’s impossible to time the market bottom, there are now investment opportunities that could double or triple over the next few years, Parameswaran said. However, he’s planning to hold more cash and shorts until the S&P 500 Index falls to 2,000 -- a decline of almost 30% from current levels.

“We were overdue for a great correction,” Parameswaran said. “The first and second quarters are going to look really bad with really bad GDP. The third quarter depends on flattening the curve, but by the fourth quarter we should be coming back. 2021 will be a phenomenal year for stocks.”

He expects the unprecedented monetary and fiscal stimulus will continue, keeping interest rates low. When the outbreak subsides, the fund will be well positioned in high-growth companies, which outperform in low-rate environments, he said.

Octahedron aims to raise $500 million by the end of the year, the people familiar said. It’s hired one analyst, and plans to hire five at most, Parameswaran said.

In the meantime, Parameswaran is running the fund from his neighbor’s apartment in San Francisco, where he remains under lockdown. His neighbor has been quarantined in another state and temporarily offered his apartment rent-free to Parameswaran, who likens the situation to a “classic Silicon Valley garage story.”

©2020 Bloomberg L.P.

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