Valiant Drops 7.4% In Q4 As Manager's Hoop Dreams Proceed

Mar 11 2013 | 10:53am ET

Hedge fund Valiant Capital Management suffered its worst-ever quarter to close out 2012, but firm founder Christopher Hansen said the poor performance has nothing to do with his extracurricular activities.

Valiant, the San Francisco-based firm that Hansen founded in 2008, lost 7.44% in the last three months of last year. Still, the fund returned 10.32% last year.

Hansen said his $2.8 billion firm's investment style was to blame for the decline, and not his plan to purchase the Sacramento Kings basketball team and move them to his hometown, Seattle, Institutional Investor reports.

"Given our patient style on the long side and focus on shorting the worst businesses we can find (particularly frauds), volatility is an undeniable reality of our business," he wrote to investors. "While this volatility can result in periods of outperformance like it did in Q3, it will also inevitably lead to periods of significant underperformance like it did in Q4."

Hansen went to some lengths to reassure investors about his deal, with Microsoft's Steve Ballmer, for the Kings. Their group's offer has been accepted, but still must be approved by the National Basketball Association and fend off a competing bid from investors who would keep the Kings in California's capital.

"Investing, not basketball, is an has always been" Hansen's passion, he wrote. "Investing is what I think about when I wake up, on the drive to work, and just before I drift off to sleep."

"Unlike at Valiant, where I am intimately involved in almost every element of our operations on a daily and weekly basis, my role in Seattle will be to provide a stable, patient, civic- and community-minded ownership group—and not to become intimately involved in player/personnel decisions."


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