Viking Loses 1.2% in October After Eschewing Many Big AI Bets

(Bloomberg) -- Viking Global Investors’ flagship hedge fund dropped 1.2% last month, faring better than many of its rivals after largely avoiding high-flying artificial-intelligence stocks.

The loss pared gains for the long-short equity fund this year to about 1%, according to people familiar with the matter, who asked not to be identified because the returns aren’t public.

Viking co-founder Andreas Halvorsen has taken a contrarian position on AI, generally staying away from big bets on the technology because it views some companies as overvalued. 

“Against the current market backdrop, we continue to exercise caution when buying stocks at valuations that, considering our forecast of revenue and earnings, offer little margin of safety,” Halvorsen said in a letter to clients in July.

A representative for Viking declined to comment. 

The hedge fund, which manages about $35 billion, sat out tech rallies in 2020 and 2021 and avoided the double-digit losses that hit rivals. While its caution didn’t entirely protect Viking from October losses, many other firms lost more money in a month rocked by a broad tech selloff and geopolitical upheaval.

Technology stocks made up just 7.5% of Viking’s bullish bets as of June 30, according to a regulatory filing. Still, chip giant Taiwan Semiconductor Manufacturing Co., a key player in the AI buildout, was its second-biggest long bet. AI hyperscaler Meta Platforms Inc. was its sixth-largest.

But Viking was less exposed to tech than several other so-called Tiger Cubs, firms that were also founded by alumni of Julian Robertson’s Tiger Management. 

Coatue Management and Tiger Global Management, for example, dedicated well over 40% of their long books to tech stocks as of June 30. Lone Pine Capital, which erased a 44% gain it had through June, allocated more than 38% to tech.

Lone Pine’s hedge fund sank 9% last month, leaving it down 7% for the year. Tiger Global’s fell 8.5% and is little changed for the year. Coatue was the top performer in the group, gaining 0.2% last month and advancing 13% for the year through October.

Earlier this year, Viking conceded that by taking its comparatively conservative stance it missed the opportunity to capitalize on the rally. 

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