One-Man Hedge Fund Gains 56% With Virus-Resistant Tech Bets
Isolation is old hat for Eric Jackson. Since he launched his technology-focused hedge fund in 2017, he has been running it from a home office.
The pandemic requires little adjustment in how he works. But it does force investors everywhere to think about which companies will do better in a scarred global economy. In Jackson’s case, the crisis has given his key holdings a huge boost: Zoom Video Communications Inc. and German food app company Delivery Hero SE have lifted his long-short fund at EMJ Capital Ltd. to a 56% gain this year.
Jackson tries to hunt down data on technology usage that will lead him to winners. On Feb. 3, more than a month before the virus was declared a pandemic, Jackson noticed a sudden spike in downloads of the Zoom app in China. He already owned the stock because he liked its video conferencing technology and its CEO. The China numbers persuaded him to double down.
“They are a verb. You don’t see too many verbs in the tech space. When one comes along like Google, you would have been wise to plunk down an investment and stick with it and I think the same is going to be the case for Zoom,” he said. Zoom shares have more than doubled this year.
Hedge funds were hit hard by client withdrawals and investment losses during the March market rout, with global hedge fund assets dropping below $3 trillion for the first time in six years. In Canada, only five of 61 hedge funds tracked by Venator Capital Management Ltd. posted gains in the first quarter of the year.
Jackson runs one long-short fund, which has about $61 million in assets and is up 131% since inception in October 2017, as of Tuesday’s close. It typically owns about 11 to 20 stocks and has a similar number of short positions. Options are part of the strategy: the fund held out-of-the-money put options against some indices that rose sharply in value during the sell-off of late February and March as investors sought to buy protection against further declines.