- Advertisement -
- Advertisement -

Related

Bet on Online Dating Pays Off for HCP Focus

Latest Report

This year’s Alternative Fixed Income report from HedgeNordic explores how institutional investors and asset managers are navigating this new reality, balancing yield and resilience amid shifting credit cycles, structural change, and evolving sources of return.

Stockholm (HedgeNordic) – HCP Focus Fund, a long-only equity hedge fund maintaining a very concentrated portfolio of businesses that benefit from network effects, has seen one of its 12 holdings nearly double in value in 2019. The fund managed by Ernst Grönblom (pictured) has over 16 percent of its existing portfolio invested in Match Group, the operator of Tinder and a network of other dating sites and apps. The shares of Match gained 98 percent year-to-date through the end of last week.

Grönblom’s security selection process involves finding so-called slow travelling ideas, which require more expertise and effort for their understanding than simple, straightforward investment ideas. The concept of demand-side economies of scale, known as network effects, has been the most dominant slow travelling idea in HCP Focus Fund’s portfolio for some time. The long-only hedge fund’s concentrated portfolio is hence comprised of 12 businesses that benefit from demand-side economies of scale. This level of concentration offers both enough diversification and the opportunity to collect the full benefits of stock picking, according to Grönblom.

HCP Focus Fund had €69.7 million in assets under management at the end of July, with over 16 percent of that amount being invested in Match Group. The operator of Tinder and other dating services has seen its market value nearly double year-to-date, reaching an all-time high in early August after a surge in new Tinder subscribers boosted revenue in the second quarter.

“If you’re a single heterosexual guy, you don’t really care about the technical details,” Ernst Grönblom told Bloomberg. “When a dating platform has reached critical mass, it’s very, very hard to dislodge it. If a competing platform tries to enter the market, it’s very hard to convince people to create accounts on several dating platforms.”

His concentrated portfolio of companies with network effects, including Amazon.com, PayPal, Facebook and others, has outperformed equity markets, long/short, long-only equity funds and other players in recent years.  HCP Focus Fund gained 33.4 percent year-to-date through the end of July, currently ranking as the second-best performing member of the Nordic Hedge Index, only ten basis points behind the leader. Grönblom’s fund generated an annualized return of 20 percent since the fund was launched in December of 2012.

His highly concentrated portfolio is a source of relatively large movements in returns. “Most of my portfolio companies are highly valued, at least according to traditional metrics,” he told Bloomberg. “If there’s a panic in the market, these companies will typically suffer more severe losses than regular companies.”

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Report: Alternative Fixed Income 2025

As 2025 is deep in its final quarter, investors find themselves navigating a world of contradictions. Equity markets, flush with liquidity and investor optimism,...

Beyond Plain-Vanilla: Ridge Capital Navigates Three Distinct Market Years

In a traditional high-yield bond fund, the yield-to-maturity often serves as a rough indicator of expected returns. Ridge Capital, however, operates with a more...

Macro Matters Again and Nordkinn is Built for It

“Macro is back and matters.” The phrase has become a recurring headline in financial media. Macro is back and so is the ability to...

Private Credit’s Evolution

By Laura Parrott – Nuveen: The private credit market has experienced remarkable growth, reaching $1.7 trillion in assets under management and 13% annual growth since the...

Senior, Secured, Cash Flow-Paying: PenSam’s Playbook for Private Credit

Institutional investors today allocate across virtually every corner of public and private markets, and private credit has emerged as a market in its own...

Exploring the Capital Call Corner of Private Credit: Aegon’s Decade of Experience

The fixed-income universe, spanning both public and private markets, offers a broad spectrum of instruments across different durations, risk levels, and liquidity profiles. Among...

Allocator Interviews

In-Depth: High Yield

- Advertisement -

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.