Viking Global Hedge Fund Drops 1.2% in October After Avoiding Big AI Bets

Viking Global Investors saw its main hedge fund drop 1.2% last month. This smaller loss kept the long-short equity fund up by about 1% for the year. Co-founder Andreas Halvorsen chose to stay away from major artificial intelligence bets because his firm views some tech companies as too expensive.

Fund Performance And Strategy

Halvorsen noted in a client letter in July that the firm wants to be careful when buying stocks with prices that do not offer enough safety. The $35 billion hedge fund previously missed out on tech rallies in 2020 and 2021, which helped it avoid heavy losses that hit competitors back then. Technology stocks made up just 7.5% of Viking's bullish bets at the end of June. Even so, chip maker Taiwan Semiconductor Manufacturing Co. was its second-biggest long bet, and Meta Platforms Inc. was its sixth-largest.

Comparison With Rival Firms

Other funds run by former employees of Tiger Management took on much more tech exposure. Coatue Management and Tiger Global Management put over 40% of their long books into tech stocks by June 30. Lone Pine Capital put more than 38% into tech and saw its fund sink 9% in October, erasing its gains for the year. Tiger Global's fund dropped 8.5% last month. Coatue performed best in the group, gaining 0.2% in October and staying up 13% for the year. Viking earlier admitted that its conservative approach caused it to miss out on parts of the broader market rally.

Context

Hedge funds like Viking use pooled money from investors to trade in different assets with the goal of making a positive return regardless of market direction. Large shifts in technology stock prices and global political events often cause sharp monthly swings for these funds. Many investment firms closely balance their holdings to protect against sudden market drops.