In early 2020, 3G Capital — a 20-year-old private equity firm perhaps best known for the $20 billion profit it made on its acquisition of Burger King in 2010 — quietly backed an alum of Coatue Management to run a technology-focused hedge fund. Five years later, Institutional Investor has an exclusive on a fund that few investors have heard of and whose returns put it at the top of its category.
Michael Ding, the 34-year-old manager of the equity long-short fund, has generated annualized returns since inception in early 2020 of 22 percent net of fees, sources familiar with the hedge fund told II. Year-to-date, the fund is up 50 percent net of fees, the sources added. The 3G-backed fund’s outsize returns over a five-year period make it a standout, and according to a third-party who analyzes hedge fund data, beat the performance of high-profile peers that include Viking Global Investors, D1 Capital Partners, Lone Pine Capital, Tiger Global, among others.
The fund, which has approximately $300 million in assets, according to filings, is different from most competitors, many of which invest primarily in the biggest names that have come to dominate indices, portfolios, and headlines. Ding is a specialist in ‘secularly advantaged’ small and mid-cap companies — primarily in the U.S. and Asia. His concentrated portfolio has 10 to 15 names, including AppLovin Corp. and Goosehead Insurance, according to recent public filings.
Ding, who picks individual stocks based on fundamental research, also can tap 3G’s network of CEOs, CFOs, and chairs of major public companies as well as its proprietary research on everything from global economies to AI. The fund’s name is 3G Courser, meaning a swift and powerful horse. The moniker also is a nod to Ding, who is of Chinese descent and was born in the Year of the Horse.
Sources told about the fund said it will be closely watched because of the performance and its 3G pedigree.
3G was founded in 2004 as a family office by Jorge Paulo Lemann, Carlos Sicupira and Marcel Herrmann Telles, who made billions (reportedly now at $43 billion) in investment banking in Brazil, and Alexandre Behring, who helped manage their personal fortunes since the mid-1990s.
The firm, which has approximately $14 billion in assets, is unlike any peer. 3G’s partners are its largest investors, along with a small group of family offices close to the firm. The firm has only invested in a handful of companies, with every fund containing one acquisition. Investments have included CSX, Heinz, and Kraft. In 2022, it closed a $7.1 billion take-private deal for Hunter Douglas, a prestigious Dutch brand of window treatments. 3G also is a long-term investor, exemplified by Burger King, which it held for 15 years.
Six years ago, the firm decided it wanted exposure to technology through the public markets — as opposed to venture capital — and believed backing a hedge fund was the best way.
3G, which has long made big bets on new and promising talent, found Ding, a Harvard graduate, who was then a research analyst picking tech investments for Philippe Laffont’s Coatue. 3G believed Ding was a next gen tech stock picker, despite — or perhaps because of — being (almost) unknown outside Coatue, where he worked for more than seven years. (In 2018, one public mention of him was a couple of sentences in Forbes’ 30 Under 30 roundup.)
The hedge fund is only the second investment strategy for 3G. While Ding still remains under the radar — it may not be for long.
3G and Ding declined to comment.
