Sylebra, a tech hedge fund, rose 10% while stocks tanked

A hedge fund created by two Coatue Management alumni made 10% last month while avoiding a selloff in global tech giants such as Facebook and Amazon.

Thanks to bullish and bearish investments in smaller tech companies, Sylebra Capital Management’s $1.1 billion fund profited while stocks performed terribly. Half of this profit came from MuleSoft Inc., an American company that rose by 42% in March since becoming a takeover target.

The past two months have been a period of suffering for most hedge funds thanks to economic instability, trade uncertainty, tweets from Donald Trump and a global growth that is no longer exponential. Sylebra’s investment on MuleSoft paid off while rivals betting on rising stocks ultimately suffered.

Being in favour of non-US stocks and companies that are either medium-sized or small, Sylebra has steered clear of destructive paths. The company owned shares in MuleSoft since the second quarter of 2017, which proved very beneficial once the NYSE FANG+ Index revealed most major companies (and parents of major companies like Alphabet Inc.) dropped 6.9% in March. This was the biggest drop in over two years for Amazon, Facebook, Netflix and even Alibaba Group Holding.

Only a third of hedge funds tracked by Eurekahedge made money in March across the world. Tech-based funds mostly lost about 0.2%, while 38% made some profit.

Dan Gibson, CIO of Sylebra, trained as an analyst and partner for Coatue Management, being closely tied to partners who had previously worked in technology investments. The results of March left this year’s gain at 5%, compared with an annualised 16% return since the founding of the company back in 2011.