Ex-Tennis Pro’s Hedge Fund, Backed by SoftBank’s Claure, Up 124%
Ex-Tennis Pro’s Hedge Fund, Backed by SoftBank’s Claure, Up 124%
(Bloomberg) -- It was a year of ups and downs for SoftBank executive Marcelo Claure, but at least one of his investments looks like a winner.
DPM Capital, a $160 million hedge fund that counts Claure as a backer and investor, surged 124% last year, according to a client letter seen by Bloomberg. The long-short equity fund trounced the S&P 500 Index four times over and left its hedge fund strategy peers -- which posted gains of 13% -- in the dust.
DPM started trading in 2017 with personal backing from Claure, who also had at least a 20% stake in the firm, filings show. The founder of New York-based DPM, Pedro Escudero, 44, is a former professional tennis player who worked in several areas across Wall Street, ranging from derivatives to global rates. Most recently, he worked in sales and marketing for Latin America at JPMorgan Chase & Co.
The fund focuses on investing in companies with monopolistic or oligopolistic qualities. A smaller portion of the portfolio is allocated to companies that are “unique species,” having adapted their business models to survive intense price competition.
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DPM told investors that 95% of the positions it took or held at the start of last year had positive results. The fund has gained 49% since its October 2017 inception, while the S&P 500 returned 34%.
Claure and Escudero declined to comment.
Escudero, who came to the U.S. from Spain in 1996, said in the letter that he reads multiple biographies of a company’s founders and top executives before diving into its annual reports and regulatory filings.
“We need to understand exactly where in a business’s story we stand -- are things just about to get good, or is it headed for a swift decline? -- before we invest,” he wrote.
For now, Escudero is using bearish wagers more as a hedge rather than a directional bet, because “absent signs of an imminent recession, we believe our time is better spent on longs.”
He added that the track record for the hedge fund industry over the past decade is “embarrassing,” and that if DPM fails to beat the S&P 500 then it’s “just another irrelevant fund destined for failure.”
Last year started with a power struggle for Claure, 49, the chief operating officer at SoftBank Group Corp. In February, the staff he’d hired to improve operations across the firm’s portfolio companies were shifted over to working for Rajeev Misra, who runs SoftBank’s Vision Fund, Bloomberg reported. Meanwhile, one of the biggest deals overseen by Claure -- the pending sale of Sprint Corp. to T-Mobile US Inc. -- is up in the air after New York and California sued to block it.
Still, the executive has had some new opportunities crop up. In October, Claure was appointed executive chairman of WeWork after SoftBank, the office-sharing company’s biggest investor, ousted founder Adam Neumann. He was also given responsibility for overseeing the Japanese conglomerate’s expansion into Latin America.
--With assistance from Pavel Alpeyev.
To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Josh Friedman, Dan Reichl
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