Hedge fund manager Chris Hansen started getting worried about the coronavirus in January. Now he’s up 36%.
Mr. Hansen, who runs San Francisco hedge fund Valiant Capital Management, had an early conviction the novel coronavirus would wreak havoc on the global economy.
By the end of March, Valiant was up 36% for the year before fees, said people familiar with the firm. The return stands in contrast to a 19.6% drop in the S&P 500 and a 21.3% decline in the MSCI All World Index, a broad global index measuring the performance of stocks around the world. In addition to its stock bets, Valiant also notched gains on credit protection on global investment-grade and high-yield bond indexes it had bought in mid-February that became more valuable as the likelihood of corporate defaults rose, one of the people said. The fund had closed half of that hedge a month later.
“He was speaking to an audience of 80 or 90 people and said that 10 to 20 of us will likely contract the virus and several of us will, statistically speaking, die,” said Matthew Lusins, a partner at real estate private-equity firm Convergence Investments, which organized the charitable conference. Valiant, founded by Mr. Hansen in mid-2008 after he left hedge-fund firm Blue Ridge Capital, wasn’t immune to the pressure to keep pace.
When stock markets started their roller-coaster ride in late February, the $1.4 billion stock hedge fund also began profiting on bets it had made against companies it viewed as fraudulent or fragile months or, in some cases, years ago. The firm also has cashed in put options, contracts that give the owner the right to sell shares by a certain date at a specific price, it had bought on the cheap against stock indexes in the U.S. and India, according to people familiar with the firm.
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