TIGER IN THE VALLEY

Is a bubble forming in tech stock prices? This year’s top hedge fund manager says you haven’t seen anything yet.

Preferring the sunny side, Light Street Capital’s Glen Kacher has no regrets about leaving Wall Street.

When you live and work in a town where the median home costs $2.7 million and hobnob with the executives of billionaire factories like Facebook and Tesla, it’s easy to see why you might think technology stocks are invincible. So far in 2017, the Nasdaq Composite index has gained 25%.

Light Street Capital, based in Palo Alto, California, is up 52.7% net of fees in the first 10 months of 2017, making it the top-performing hedge fund this year. Its babyfaced boss, Glen Kacher, is pounding the table, saying tech stocks have room to run.

“The idea that this is a bubble is a joke,” says Kacher, 46. “I don’t think people are looking at the fundamentals.”

Since its inception in 2010, Kacher’s $1.1 billion tech-focused hedge fund has delivered annualized net returns of 19.8%. More than anything, he has been in the right place at the right time. By parking himself in Silicon Valley instead of New York and spending time with VCS and entrepreneurs rather than Wall Street’s sell-side analysts, Kacher has gained the equivalent of first-mover advantage among hedge funds.

The insights he gleans from startups guide his longs and shorts. Simply put, he buys disruptors and shorts incumbents. “We spend as much time as possible looking for the next great product cycle and adoption cycle in tech because it disrupts the incumbents,” Kacher says. “Internet technologies and software are changing the competitive landscape, and that means our opportunity set is expanding, especially on the short side.” The son of a Mobil oil trader, Kacher grew up in northern Virginia. He was drawn to tech at an early age. The money he made mowing lawns was used to buy a Commodore 64 and a modem to connect to online bulletin boards.

Kacher learned investing from two greats— Julian Robertson and Roger Mcnamee. He landed in New York at Robertson’s Tiger Management in 1993 after one of his lecturers at the University of Virginia, where Kacher studied finance, introduced him to the legendary hedge fund firm. Kacher worked on the tech team, getting the fund into names like Cisco and Microsoft.

Tiger, of course, is famous for having spawned dozens of hedge funds known as Tiger Cubs. “The thing we always were required to do was to get Julian to understand which compa-