Philippe Laffont’s Coatue Management has kept the majority of its assets in cash after slashing its hedge fund’s equity market exposure earlier this year, and he expects stocks to fall much further.
(Bloomberg) — Philippe Laffont’s Coatue Management has kept the majority of its assets in cash after slashing its hedge fund’s equity market exposure earlier this year, and he expects stocks to fall much further.
The firm now has 70% to 80% of its assets in cash, Laffont said Tuesday at the Robin Hood Investors Conference in New York, according to people who heard his remarks. The event was closed to the media.
As of May, Coatue had cut net exposure of its hedge fund to 14%. The fund has lost 18.7% this year through September.
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While the effects of rising interest rates are already evident in the housing market, their impact on “everything else” will be delayed, said Laffont, 55. But when that hits, it will happen quickly, he said, according to the people.
A spokeswoman for New York-based Coatue declined to comment.
Laffont said his firm is moving aggressively to provide credit to private companies in need, the people said. Coatue recently launched a structured equity fund to provide liquidity to cash-strapped startups and to help them avoid having to raise money at lower valuations.
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He added that funds should take a conservative approach to valuing private companies in this environment by marking them down aggressively.
Laffont’s remarks weren’t all bearish. He said the trend toward electric vehicles is still in its infancy and that the cost of electricity will fall as the US improves its ability to produce power.
He also said he sees “green shoots” of opportunity in China and that he’s keen on artificial intelligence and the infrastructure of technology and the internet.
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