Chris Hansen, the man who's proposing to return NBA basketball to Seattle, made his money in the secretive world of hedge funds, where managers can earn fantastic paychecks using arcane investment strategies.
Chris Hansen, the man who’s proposing to return NBA basketball to Seattle, made his money in the secretive world of hedge funds, where managers can earn fantastic paychecks using arcane investment strategies.
Hansen started his firm, Valiant Capital Management of San Francisco, in March 2008 — hardly the ideal time to launch a hedge fund, given the financial crisis that hit just six months later.
Nonetheless, Valiant has grown quickly. According to AR, a magazine covering the hedge-fund industry, Valiant went from $1.1 billion in assets under management in mid-2009 to $2.1 billion as of last July; that’s still a fairly modest size for a hedge fund.
Hedge funds differ from mutual funds aimed at ordinary investors in several ways. Most mutual funds limit themselves to a particular slice of the investable universe: blue-chip European stocks, say, or small biotechnology companies.
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Hedge funds, however, can employ virtually any investment strategy they think they can make pay off: short selling, currency and interest-rate swaps, venture capital and more. They also can use borrowed money, or leverage, to magnify their trading returns (though that carries a higher risk if the trade doesn’t work out).
U.S. hedge funds have been largely unregulated, and remain so even under the Dodd-Frank financial-overhaul law. However, they cannot market themselves to the general public, and most of their investors are rich, financially sophisticated or both: The minimum investment in Valiant, for example, is $10 million, according to documents filed with the Securities and Exchange Commission.
Also unlike mutual funds, hedge funds pay the people who run them based on the fund’s performance. A typical fund might charge a management fee of 2 percent of total assets under management, plus a performance fee of 20 percent of all investment gains.
Because hedge funds cater to the very rich, and because much of their success depends on other market participants not knowing their trading strategies, they tend to keep a low profile. A review of SEC filings and the financial literature, however, does provide some clues as to Valiant’s orientation.
The fund seems to favor investments in technology and health care. As of year-end 2011, according to SEC records, Valiant held publicly traded stocks valued at $831.2 million; its largest holding was $118.7 million in Apple stock. Other holdings included Adobe Systems, Broadcom, Google, OpenTable, Qualcomm and ExpressScripts. The firm also has a stake in Dropbox, a fast-growing tech startup that has yet to go public.
Valiant also has several investments in India. In April 2011 it led a $44.5 million funding round for Yatra Online, a kind of Indian Expedia; Norwest Venture Partners and Intel Capital also took part. (Norwest declined to comment about its relationship with Valiant.)
Other Indian companies Valiant has stakes in include JM Financial (financial services), Spandana Spoorty Financial (microfinance) and Jai Corp. (diversified, including textiles and infrastructure).
Drew DeSilver: 206-464-3145 or email@example.com