Light Street Capital Management is a Palo Alto-based hedge fund, which mainly invests in public companies from the technology and media sectors. It was founded back in 2010 by Glen Kacher, who previously worked at Integral Capital Partners as a managing director, where he was in charge of both public and private investments in the internet, computer services, information security, software, and technology markets. Prior to joining Integral Capital Partners, Glen Kacher was employed at Tiger Management, first as a research analyst and then as a consultant. There, he broadened his investment philosophy working on investments in the hardware, software and networking industries. He holds a BS in Commerce with Distinction from the University of Virginia’s McIntire School of Commerce, and an MBA from Stanford University’s Graduate School of Business.
At the Sohn Conference in April, Glen Kacher presented Palo Alto Networks (NYSE:PANW) as his best idea at the moment. Palo Alto Networks (NYSE:PANW) is a multinational cybersecurity company headquartered in Santa Clara, California. The company’s leading product is a platform that offers professional firewalls and cloud-based extensions, trying to cover various security aspects. Glen Kacher was bullish on Palo Alto Networks (NYSE:PANW) not only because of its very good performance, but also because he thinks that the time has come when there is a growing need for this type of company. Cybercrime is spreading, because there are countries that need money, like North Korea, which is treating cyberhackers like they are Olympians, which presents a real problem for the countries that are their targets. But, of course, North Korea is not the only country with cyberhackers and that’s why Glen Kacher finds this the perfect moment for the prosperity of cybersecurity companies, and he is of the opinion that Palo Alto Networks (NYSE:PANW) is one of the best among them. You can check the video below to find more details on Glen Kacher’s best stock pick in April.
Light Street's Glen Kacher on his best idea at Sohn from CNBC.
At the more recent Sohn Conference, at the end of October, Glen Kacher presented his new number one stock pick, and it’s an e-commerce company that sells luxury fashion products, called Farfetch Limited (NYSE:FTCH). The company is headquartered in London, but has branches in North America, Japan, China, and South America. Glen Kacher holds the opinion that Farfetch Limited (NYSE:FTCH), which offers a unique business that uses the marketplace model, partnering with various brands and boutiques globally, will thrive in its niche market and that it will bring serious revenue and earnings. He doesn’t think that Amazon poses an important threat to it. More details about Glen Kacher’s newest presentation at the Sohn Conference can be seen in this video.
Light Street Capital's Glen Kacher on the industry he considers 'Amazon's kryptonite' from CNBC.
Glen Kacher’s Light Street Capital has had some seriously good returns throughout the years, and it was one of the best performing large hedge funds in our database during the second quarter. Since its inception (2010) through December 2017, the fund has delivered annualized net returns of 19.8%. In 2017, it brought back an impressive 38.6%. In 2018 YTD (October) the fund is up by an amazing 53%.
However, as the Nasdaq 100 Index lost 8.7% percent in October, it has taken down technology stocks with it, which consequently affected hedge funds, especially those who mostly bet on tech companies. Hence, the fund's Light Street Mercury Master fund lost 9.2% in October, while still managing to post a 10% gain on a YTD basis (through October). According to its plain brochure, as of December 31, 2016, Light Street had total discretionary assets under management of around $772.53 million.
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On the next page you can read about the most important changes to the fund's equity portfolio during the third quarter.
At the end of the third quarter, Light Street Capital’s equity portfolio was valued at $1.47 billion after several changes were made to it during the period, including adding four new companies and dumping six. The most valuable position it held was in Wayfair Inc (NYSE:W), counting 1.11 million shares, with a value of $164.36 million. The e-commerce company, which sells home goods, was previously known as CSN Stores. Since the beginning of the year, the company’s stock has gained 32.73%, and it is currently trading at $107.54. The fund's second-largest holding at the end of Q3 was Yandex NV (NASDAQ:YNDX), with its position in the company being worth $106.53 million, counting 3.24 million shares.
Light Street's third-biggest stake was in the company that was also the third most popular stock among hedge funds in Q3 of 2018. We are talking about Amazon.com, Inc. (NASDAQ:AMZN), 51,608 shares of which valued at $103.37 million were owned by the fund at the end of Q3 of 2018. Over the past 12 months, the company’s stock has gained 40%.
Among the biggest new additions to the fund’s portfolio was the aforementioned Farfetch Ltd (NYSE:FTCH), in which the company established a position that was valued at $39.65 million and counted 1.46 million shares. This new position accounted for 2.7% of the fund’s 13F portfolio value. It is interesting to note that since Glen Kacher pitched Farfetch at the conference, the company’s stock has gained 9.3%. Furthermore, another big new addition was Universal Display Corporation (NASDAQ:OLED), 229,840 shares of which the fund purchased in Q3, acquiring a position that was worth around $27.10 million on September 30. Universal Display Corporation is a company that produces organic light emitting diodes and provides various services to the lighting and display industries. Year-to-date, the company’s stock has lost 44.74%. The number of investors from Insider Monkey’s database long Universal Display Corporation dropped by 2 in recent months, as on September 30 there were 20 hedge funds bullish on the stock.
The fund lost faith in some of its former holdings and decided to sell them during the quarter. Among the biggest dropped stakes were those in Match Group Inc (NASDAQ:MTCH), Dropbox Inc (NASDAQ:DBX), and Facebook, Inc. (NASDAQ:FB). Light Street Capital said goodbye to 850,000 Match Group shares which had been valued at $32.93 million on June 30, as well as 873,405 Dropbox shares worth $28.32 million, and 139,012 Facebook shares with a value of $27.02 million.
This article was originally published at Insider Monkey.