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October 18, 2017  

Profits Flowing Again for Viking Global LPs

A mid-year move by Viking Global to reduce assets under management and install new leadership atop its investment team seems to be paying off.

Consider that its flagship fund, the $15 billion Viking Global Equities, was up 10.8% year-to-date at the end of September, and has continued to post incremental gains so far this month. That compares with a year-to-date increase of 9.6% for the HFRI Equity Hedge (Total) Index at the end of the third quarter.

During the same period, the $6.4 billion Viking Long Fund was up 20.3%, outstripping a 14.2% increase in the S&P 500 Total Return Index.

The performance of both Viking Global vehicles marks a turnaround from 2016, when Viking Global Equities fell 4% — its worst-ever annual return. As for Viking Long Fund, it eked out a low single-digit return last year.

The subpar performance was a key reason Viking Global founder Andreas Halvorsen told investors in June that he would return about a quarter of the firm’s capital — $8 billion out of $32 billion. At the same time, Halvorsen promoted portfolio managers Benjamin Jacobs and Ning Jin as co-chief investment officers in place of Daniel Sundheim, who stepped down. Bloomberg reported in July that Sundheim is aiming to launch his own hedge fund next year.

A source who attended an Oct. 10 investor presentation hosted by Viking Global felt confident that the firm’s performance had turned a corner. “I walked out of that meeting thinking they have rediscovered who they are,” he said. “They essentially said we got away from what makes us good — developing talent.”

Since returning the $8 billion of investor capital in August, Viking Global’s net assets have increased marginally to about $25 billion. While both the flagship fund and long-only fund have long been closed to additional investments, the subscription window for the $3.1 billion Viking Global Opportunities fund will briefly reopen early next year. That vehicle, which combines the most-liquid long positions held by Viking Global Equities with private equity investments, has opened to new investors only twice before — ahead of its 2015 launch and again nine months later.