Another month, another strong performance for Light Street Capital Management in its continuing bounceback from recent devastating losses.
The tech-focused Tiger Grandcub founded by Glen Kacher posted a 9.5 percent gain in its long-short fund in June and is now up 54.6 percent at the halfway point of 2024, making it a top-performing hedge fund this year. Its long-only fund surged 8.9 percent for the month and 36.9 percent so far this year.
The performance disparity between the two funds suggests Light Street is also making money this year from its shorts despite the S&P 500’s 15.3 percent gain in the first half. Light Street declined to comment.
Institutional Investor previously pointed out that Light Street is bullish on the prospects of artificial intelligence in general and is benefiting from a significant bet on semiconductor companies, which is another way to invest in AI. At the end of the first quarter, they represented three of the firm’s four largest U.S.-listed long positions, accounting for roughly one-third of U.S. assets.
Nvidia, the largest long, made up 17 percent of the U.S. long portfolio. No. 2 long Taiwan Semiconductor Manufacturing Corp. represented about 14 percent of U.S. assets after Light Street boosted its stake by about 45 percent, and Advanced Micro Devices, the fourth-largest long, accounted for 6 percent of assets after Light Street halved the position in the first quarter. In the first half of the year, the stocks were up 150 percent, 67 percent, and 10.2 percent, respectively.
“... TSMC has become one of the most dominant companies in the applied technology sector,” Light Street said in its fourth-quarter 2023 client letter, obtained by II. It stressed that the company has a more than 59 percent revenue share and a more than 90 percent profit share of the $230 billion-plus semiconductor foundry industry.
Another highflier this year: Amazon, which climbed about 27 percent in the first half. Amazon and Nvidia are two of the four Magnificent Seven stocks that ranked among Light Street’s nine largest longs at the end of the first quarter, along with Facebook parent Meta Platforms and Microsoft. In the first six months, Meta surged 42 percent and Microsoft rose 19 percent.
Meanwhile, Broadcom, Light Street’s sixth-largest long, jumped 44 percent in the first half. It is a supplier of semiconductor and infrastructure software products and is considered a partial AI play.
“As we have discussed at length in prior letters, early indications of AI’s potential are promising,” Light Street told clients in the year-end letter. “The back half of the 2020s will bring with it an inflection in both technological capabilities and global economic impact. Studying this evolution remains the top priority of our team as we position our portfolio to capture this immense value creation event.”