Stockholm (HedgeNordic) – After experiencing both ups and downs in performance over the past few years, tech-focused long/short equity fund Thyra Hedge is enjoying its best year since inception with an advance of 11.6 percent in the first five months of 2023. The fund managed by Inge Heydorn has successfully capitalized on the increasing popularity and advancements in artificial intelligence (AI).
The buzz and boom surrounding AI, with chipmaker Nvidia playing a significant role as one of its primary beneficiaries and enablers, have greatly contributed to Thyra Hedge’s strong performance this year. “We have been heavily exposed to semiconductors and AI, so the AI trend is clearly boosting our performance,” Heydorn tells HedgeNordic. While the fund has achieved strong returns from its investment in Nvidia, Heydorn emphasizes that it is the broader AI ecosystem that has been the driving force behind his fund’s performance this year. “It is the ecosystem around AI that has driven performance.”
“We have been heavily exposed to semiconductors and AI, so the AI trend is clearly boosting our performance.”
Heydorn and his team adopt a thematic approach to construct a market-neutral portfolio for Thyra Hedge. “In technology, what often happens is that a big innovation enters the market and then it takes many years for it to be implemented,” Heydorn previously told HedgeNordic. “Companies positioned correctly in a particular trend are going to win,” he added. “But it is always going to take time.” Heydorn further emphasizes that the acceleration of AI adoption “will help performance going forward, as we are still in the early stages of this trend.”
“[The acceleration of AI adoption] will help performance going forward, as we are still in the early stages of this trend.”
Thyra Hedge’s sizable long exposure to Microsoft has also contributed to its strong performance year-to-date. Heydorn explains, “In the software and cloud space, we believe AI is becoming a tangible factor in results, with Microsoft’s Azure business starting to benefit from its partnership with OpenAI.” As of the end of May, Thyra Hedge had 6.9 percent of its long exposure to Microsoft.
The first-quarter earnings season has fueled Heydorn’s optimism about the prospects of the highly-valued tech sector, particularly with cost-cutting expected to drive earnings growth. “Cost cutting continues to be a feature of most of the results we are seeing,” says the tech-focused fund manager. “The tech sector is well placed to exercise cost control, as high gross margins provide a lot of flexibility in the cost structure,” he elaborates. “This is one of the ways we anticipate tech driving earnings growth materially higher than the market this year and one of the things which keeps us optimistic overall.”