Tesla, Wirecard — A Long-Short Bet Has Helped 'Tiger Cub' Post 52% Gains This Year

Philippe Laffont’s Coatue Management has returned 52% gains this year, as of November-end, betting big on Tesla Inc TSLA and against beleaguered Wirecard AG WCAGY, the Financial Times reported.

What Happened: Even though global markets have risen more than 10%, till the end of October this year, the average hedge fund lost 4.5% in the same period, with equity-focussed hedge funds only returning 3%, according to FT.

Coatue managed to swim against the tide — thanks due to its large exposure to Tesla, which has risen 616% on a year-to-date basis.

The hedge fund’s investment in the Elon Musk-led company’s 3.1 million shares was valued at $1.3 billion at the beginning of this month. 

That investment would be worth $1.86 billion, as of press time, assuming a similar amount of shares are held.

Laffont said in 2018 that technology, mostly found in software, semiconductors, and other “obscure” things, is “coming everywhere, it’s the future of cars and the future of transportation and every sector."

Why It Matters: Laffont, known as “Tiger cub,” due to his learning the ropes at Julian Robertson’s Tiger Management, bet against the German payments firm Wirecard, which has gone insolvent.

The company’s shares collapsed this summer when it said it could not locate $2.1 billion in cash listed in its books.

S3 partners analyst Ihor Dusaniwsky disclosed at the time that Wirecard was the most heavily shorted stock on German bourses and gave an estimate that short sellers made $2.25 billion of profit due to the implosion of the firm.

Coatue has also benefitted from investments in Zoom Video Communications, Inc ZM, solar panel manufacturer Sunrun Inc RUN, and PayPal Holdings Inc PYPL.

Zoom, Sunrun, and Paypal shares have spiked 502.6%, 317.9%, and 101.3%, respectively this year on a year-to-date basis.

Price Action: Tesla shares closed nearly 1% higher at $599.04 on Friday. On the same day, Wirecard AG OTC shares closed 4.92% higher at $0.32.

Related Link: Michael Burry Of 'The Big Short' Fame Confirms He's Shorting Tesla