Jericho Capital Up 30% In 2012, Gains From Short Velti Position
By Tabinda Hussain
January 14, 2013
Here is a hedge fund that we have never heard of, but judging by the year-end performance, it is one we should have. Jericho Capital generated a 24.4 percent net return last year. Jericho’s equity long/short strategy was successful on both ends with the long portfolio gaining 21.6 percent and the short portfolio returning +9 percent, on a gross basis. The firm has an increasing asset base of $1.05 billion as of Jan 2013 and gained in ten out of twelve months in 2012.
Jericho was up on its short position in Velti Plc (NASDAQ:VELT), a company that deals in mobile marketing and advertising technology. The fund has held the position since before the 4Q2012. Velti Plc (NASDAQ:VELT) lost 45 percent of its market value in the last quarter of 2012. The Q3 earnings of the company missed market expectations and reported increased expenditure, Jericho believes that the management exudes a level of confidence about their ventures ($27 million deal with a ”major US telecom brand”, spin-off of Greece and North Africa businesses), which are not supported by Velti Plc (NASDAQ:VELT)’s balance sheet. With the appointment of a new CFO in December 2012, the stock has experienced a boost of +22 percent in the running year. Despite the optimism in the market, Jericho remains pessimistic about the company’s ability to raise financiers for debt and equity and predicts a dwindling balance sheet.
Jericho Capital believes good things are in store for Informatica Corporation (NASDAQ:INFA), one of fund’s long holding. Despite experiencing flourishing growth in the last six years, the stock took a beating after missing expectations in 2Q2012 and 3Q2012 on account of contracting sales . However, going forward, the company is focused on correcting the missteps. The tailwinds for the data integration and software services company is its independence from large providers like International Business Machines Corp. (NYSE:IBM) and Oracle Corporation (NASDAQ:ORCL), its expansive revenue base and the real demand for data management and integration software solutions.