Technology Stock Hedge Funds Post Losses in October Sell-Off

(Bloomberg) -- The falling tide in technology stocks is claiming more victims.

Stock hedge funds focused on technology, media and telecommunications including Whale Rock Capital Management and Light Street Capital Management posted big losses in October. Others betting on the sector such as Coatue Management and SoMa Equity Partners managed smaller declines in the month.

Technology stocks got clobbered along with the overall market last month. The Nasdaq 100 Index dropped 8.7 percent in October, the biggest monthly decline since November 2008. Overall, stock hedge funds dropped 7.4 percent for the month after managing to claw back 201 basis points of return on the last day of October, according to a report from Goldman Sachs Group Inc.

Whale Rock, the $3 billion Boston-based firm run by former Fidelity Investments portfolio manager Alex Sacerdote, plunged 11 percent in its flagship fund. That pared the year-to-date gain to 4.7 percent, according to an investor document viewed by Bloomberg.

The master fund at Glen Kacher’s $1.4 billion Light Street, based in Palo Alto, California, slid 9.2 percent last month, a separate investor document showed. It’s up 10 percent this year. Both firms reported gains of almost 40 percent last year.

SoMa Equity outperformed the tech index and the S&P 500 index in October by continuing to reduce exposure to high growth and momentum stocks amid rising volatility and the threat of a U.S.-China trade war. The fund declined 2.5 percent in the month, according to an investor document. The San Francisco-based firm has about $1.2 billion in assets.

Philippe Laffont’s Coatue also beat the markets by dropping 2.4 percent last month even as he said in a quarterly letter that October was “brutal for tech.”

Representatives for the firms declined to comment.

Still, many funds are sticking with tech and consumer stocks. Goldman Sachs data shows those groups were the most heavily bought in the final five days of October.

Here’s a broader look at how some of these funds fared:

Fund NameOct. Return (%)YTD Return (%)2017 Return (%)
Coatue Qualified Partners-2.4-0.524.2
SoMa Partners-2.523.113.1
Honeycomb Master Fund-5.76.5n/a
Hunt Lane Capital-6.4-3.310.4
Alkeon Growth Partners-8.7-1.927.7
Light Street Mercury Master Fund-9.21038.6
Whale Rock Flagship Fund-114.736

Note: YTD is through October.
Sources: Investor documents, people familiar

©2018 Bloomberg L.P.