Light Street Capital management did a deft job of navigating the stock market’s sharp twists and turns in August, especially among its favorite stocks.
The Tiger Grandcub headed by Glen Kacher remains one of 2024’s top-performing hedge funds after posting a strong 2.75 percent gain in its long-short fund last month, boosting its rise for the year to 44.18 percent, says someone who has seen the results. Light Street declined to comment.
The long-only fund was essentially flat last month and is up about 32 percent for the year, according to the source. The disparity in the performance of the two funds suggests Light Street’s hedge fund benefited from its short book. However, the largest longs also bolstered results — although so far this month, they are solidly in the red.
Institutional Investor previously noted that tech-driven Light Street has been bullish on artificial intelligence and on semiconductor companies deemed to be big AI plays. At the end of the second quarter, the firm’s two largest positions accounted for roughly 30 percent of the U.S. common stock long portfolio. Both were in the black last month.
Chip juggernaut Nvidia remained the largest U.S. long, accounting for more than 16 percent of assets even after Light Street unloaded more than 26 percent of the shares during the June three-month period, according to the most recent 13F filing. In August, the stock rose slightly, but it is down about 11 percent this month.
Taiwan Semiconductor Manufacturing was Light Street’s second-largest U.S. long, making up about 13.65 percent of assets, per the filing. The stock climbed about 3.5 percent in August but has already dropped more than 6 percent in September.
In the second quarter, Light Street initiated a position in Celestica, which immediately became the hedge fund’s third-largest U.S.-listed long. Shares of the company, which provides supply chain solutions, fell nearly 3 percent in August. The stock is down more than 8 percent this month.
Advanced Micro Devices, another chip giant, was Light Street’s fourth-largest long at the end of June. It was up a little less than 3 percent last month and is down about 5 percent in September.
In the second quarter, Light Street fully liquidated two Magnificent Seven stocks: Microsoft, previously its ninth-largest long position, and Alphabet, formerly its 11th-largest.
Kacher has told investors and others that the world is undergoing an “unprecedented AI infrastructure build.” In his fourth-quarter client letter, obtained by II, he made the case for aggressively pursuing AI-related investments, explaining, “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.”
In fact, the firm said at the time it was launching a new hedge fund, Light Street Photon, its first fund dedicated to long-short investing in public companies in the technology hardware sector — semiconductors and electric vehicles, among other industries.