Along with Eric Mindich's Eton Park Capital Management, Viking Global Advisors was once a stalwart name in the hedge fund industry, consistently generating double digit returns no matter the economy or macro climate. However, just like Eton Park, which shuttered in March, Andrew Halvorsen's Viking Global (thus named so for obvious reasons) had fallen upon hard times last year, and moments ago Bloomberg reported that the legendary hedge fund will return $8 billion to investors (out of a total $30 billion in AUM), as a result of the departure of its CIO, Daniel Sundheim, who is leaving to pursue his own business interests.
According to Bloomberg and II, Sundheim joined Greenwich, Connecticut-based Viking in 2002 as an analyst. He started managing his own portfolio in 2005, became co-CIO in 2010 and gained sole responsibility for the job in 2014. Bloomberg adds that Sundheim is leaving "because the firm couldn’t find a role for him that would give him the flexible investment mandate he was looking for."
More details from Bloomberg:
Sundheim, 40, who joined Viking as an analyst and rose through the ranks in his 15 years there, is leaving at the end of the month, according to a letter Viking sent to investors on Monday. Ben Jacobs and Ning Jin, two long-time portfolio managers, will take over the central portfolio as co-CIOs, the firm said.
Viking manages about $30 billion, making it one of the largest hedge funds in the world. The firm plans to return some of that money in August to allow its traders to hold smaller, more liquid positions, according to the letter. Viking said it has already sold off the necessary portion of its holdings.
“We are determined to set the firm up for continued strong performance and long-term success and have decided to reset to a smaller size,” Halvorsen said in the letter, adding that Viking “looks forward to opportunities for collaboration” with Sundheim.
While in 2016 Viking's flagship fund suffered a 4% drop, its biggest annual loss since inception in 1999, it managed to stage a rebound in the first quarter, largely courtesy of the bevy of tech stocks that make up its top positions, rising 7.1% in the first four months of 2017. It is therefore unlikely that Sundheim's departure was related to a spike in redemptions. As Bloomberg adds, Institutional Investor’s Alpha magazine included Sundheim on its annual “Rich List” for 2016, saying he earned $280 million in 2015 and $275 million the year before.
Departing the investing world (however briefly), means that Sundheim can focus on following in Stevie Cohen's footsteps by honing his art collection: he is a trustee of the Museum of Modern Art, he attended the museum’s Party in the Garden on June 5, sharing a table near the podium with art adviser Sandy Heller and hedge fund manager Dan Och. In 2015, he executed a complex trade with Sotheby’s enabling him to acquire “Untitled (New York City),” a painting by Cy Twombly. A few months later, he paid about $35 million for Jean-Michel Basquiat’s “Dustheads" in a private transaction.
His replacement, Jacobs, joined Viking in 2009 as a consumer and materials analyst and became a portfolio manager three years later. Over time he’s added other sectors, such as transportation and technology. Jin has worked at Viking since 2007, first as an industrials analyst. He opened the firm’s Hong Kong office and managed a portfolio across industries in Asia. Together they already manage more than a third of Viking’s capital, according to Bloomberg.
Finally, for those wondering if the sudden departure may have contributed to Friday's sell off, here is a breakdown of Viking's top positions according to its latest 13F filings, which shows an abnormally heavy realiance on the "Big 5" most important, and popular, tech stocks (courtesy of Bloomberg):
- Facebook (FB) 15.76m shares, or 9.9% of portfolio (top holding as percent of portfolio)
- Microsoft (MSFT) 29.02m shares, or 8.4% of portfolio; this position was increased in the first quarter
- Deere (DE) 14.46m shares, or 7% of portfolio and 4.5% outstanding
- Alphabet Class A (GOOGL) 1.42m shares, or 5.3% of portfolio
- JD.com (JD) 33.2m shares, or 4.6% of portfolio and 2.8% of outstanding
- Walgreens Boots (WBA) 12.06m shares, or 4.4% of portfolio
- Amazon (AMZN) 1.09m shares, or 4.3% of portfolio
- Encana (ECA) 79.3m shares, or 4.1% of portfolio and 8.2% of outstanding
- Alphabet Class C (GOOG) 1.08m shares, or 3.9% of portfolio
- Netflix (NFLX) 5.91m shares, or 3.9% of portfolio and 1.4% of outstanding