Folk Songs & Stock Charts: Coatue Is Ascendant After Besting Hedge Fund Rivals in the Downturn
Philippe Laffont's hedge fund doesn't plan to let a good crisis go to waste. Exclusive slides show the hedge fund's performance.
On a recent evening in June at the Rosewood Miramar Beach hotel in Montecito, California, the Americana singer Brandi Carlile belted out a ballad, describing a time when she was “flat broke.”
“You made me feel like a million bucks,” Carlile sang to an audience composed of the sort of people who would prefer to count their very real bucks by the billion.
The 200-something founders, investors, senior executives, and their families hadn’t flown private to Santa Barbara just to listen to Carlile’s soulful singing on a grassy green lawn at a swanky hotel.
They’d assembled that afternoon for Coatue’s ultra exclusive “East Meets West” conference. Attendees this year included Stripe CEO Patrick Collison, FTX CEO Sam Bankman-Fried, Salesforce co-CEO Marc Benioff, Meta’s new COO Javier Olivan, Snowflake CEO Frank Slootman, Altimeter Capital’s Brad Gerstner, Dragoneer’s Marc Stad, Ramp CEO Eric Glyman, Brex co-CEO Henrique Dubugras, investor Kai-Fu Lee, media and investing power couple Jessica and Sam Lessin, and the full Benchmark partnership.
One attendee called the event “Sun Valley for people who do shit.”
The headliner for the conference was Coatue founder Philippe Laffont.
He could have been dressed by the wardrobe team for the show Succession. Laffont wore a gray East Meets West monikered ballcap and polo shirt, as he explained how he outmaneuvered his hedge fund rivals by shifting 80% of his hedge fund’s billions in holdings to cash as the world unraveled. Laffont — along with his brother, Thomas Laffont, and their top lieutenant Daniel Senft — ticked through 100-plus bearish slides that outlined just exactly how the tech world had come undone and how Coatue — and those in attendance — could profit from it.
This story is based on not for attribution conversations with conference attendees, people familiar with Coatue, rival investors, and Coatue portfolio company CEOs. It’s also based on two private Coatue presentations. It shows how Coatue has outmaneuvered rival hedge funds like Tiger Global, D1 Capital, and Altimeter. Now, as Silicon Valley gets reordered in a downturn, the Laffont brothers seem to have given themselves a double-barreled mandate: trounce Tiger on the public markets and compete like a peer against Sequoia Capital in the private markets.
The conference’s name — East Meets West — was a bit of a misnomer this year. The conference, which had been on hiatus a couple years during the pandemic, had more of a “west meets west” vibe, one attendee observed. The organizers acknowledged from the outset that many Chinese entrepreneurs hadn’t been able to leave China because of the pandemic lockdowns. And while bets on Chinese companies have proved smart for Coatue and other U.S. hedge funds, the country has been less appealing following the Communist Party’s crackdown on homegrown tech billionaires.
If there was a man of the moment at this year’s East Meets West, it was probably FTX CEO Sam Bankman-Fried. He was holding court, dishing on the crypto industry as he was dishing out hundreds of millions in capital to backstop against the spreading defaults in other corners of crypto world. One source eyed Benchmark’s Bill Gurley interrogating the precocious crypto billionaire.
Stripe co-founder Patrick Collison sat on a panel with Visa President Ryan McInerney where the duo told the audience that consumer spending remains strong even as investors panic.
RJ Scaringe, the CEO of Rivian, and Amrita Ahuja, the CFO of Block, spoke together on a panel. (Coatue is a big investor in Rivian through its climate tech fund. The firm has over $1.5 billion in dedicate climate tech funds.)
Gurley, crypto investor Katie Haun, and Hillhouse Capital Management CEO Zhang Lei talked about capital allocation on another panel.
Coatue partners Caryn Marooney and Dan Rose interviewed the reliably jovial Marc Benioff during a dinnertime session. In another session, the Coatue duo helped walk the firm’s portfolio companies through its rubric for how to manage a downturn.
Laffont’s dour macro presentation stole the show.
Laffont warned that bear markets are regularly marked by abrupt upward swings, only to get erased by a further downturn.
As a result, his firm has been cautious and holds a large cash position.
Stock moves have been highly correlated so trying to pick outliers has meant getting dragged down by the broader market.
Still, there are signs that Coatue will start placing bets — not just command premium management fees for holding onto their investors’ cash. Coatue has started to stake out — at least intellectually — bullish positions on Tesla, DoorDash, Nvidia, Snap, and others. (More on Coatue’s macro views in Newcomer Thursday.)
At the end of the presentation, Laffont polled the attendees via an app on their phones as to whether they thought the market would get better or worse. One percent of respondents said that they thought the market would go up 20% from the time of the poll. The majority of attendees thought the market would be flat or down for the rest of this year, according to people in attendance.
One member of the Coatue team joked that if most of the audience thought the market would go down, then that would be a good time for Coatue to start buying.
Paying Newcomer subscribers can read on to get access to Coatue’s internal thinking about how it navigated the stock market correction, including never-before-published slides, below.
And tomorrow, I will email paying subscribers slides in a follow-up post that offers Coatue’s gloss on the macro environment.
You might want to open this post in your browser because your email service will probably cut off some of the slides.