This Hedge Fund Saw Risks of Coronavirus Early. Now It’s Up 36%
Chris Hansen, San Francisco fund Valiant Capital manager, placed bets against stock indexes and paid early attention to novel coronavirus implications, according to The Wall Street Journal. Back in February, Valiant Capital shorted levered companies, predicting consequences of the economic shutdown. As cruise lines, international airlines, and travel companies tanked, Valiant was up 36 percent for the year before fees, an inside source reported. Valiant also aimed at companies that they suspected to be fraudulent or fragile, a tactic that benefited the $1.4 billion stock hedge fund. The fund found gains in mid-February with credit protection on global investment-grade and high yield bond indexes.
Known as a low-profile investor on Wall Street, Hansen was vocal on his concerns about the novel coronavirus. Matthew Lusins, a partner at real estate private-equity firm Convergence Investments, said, “He was speaking to an audience of 80 or 90 people and said that 10 to 20 of us will likely contract the virus and several of us will, statistically speaking, die.” Before speaking at the investing conference, Hansen asked Lusins for a list of people attending from other countries and did not socialize at the event.
Valiant also bought puts on stock indexes in late January, creating record high index hedges. Notional values of the options contracts ranged from $1 billion and $2 billion. Hansen followed Chinese quarantines and Harvard epidemiologist Marc Lipsitch, among other experts, since January, taking early predictions seriously. The fund’s success came during trying times for the international community, and people close to the firm told The Wall Street Journal about moments of extreme dissonance. Now Hansen claims Valiant holds no significant power over the virus’s impact as the economy braces for the unknown.