Tom Wyman believes his Global Internet Fund—which focuses on public companies in the mobile internet industry—is the only one of its kind, and he thinks that's odd.
“[F]or some really bizarre reason which I can't explain,” Wyman told FINalternatives in a recent phone interview, “there's not an internet-focused hedge fund in existence today, which is amazing given that we're 20 years down the road and this explosion of activity is going on.”
Wyman launched his San Francisco-based firm, Internet Capital Management, in April 2013 and is now in the process of fundraising. The Global Internet Fund was up 12.24% net of fees for February 2014, compared to 2.67% for the HFR Global Equity Hedge Index. The fund ended 2013 up 7.53%, after nine months of trading.
“The nice thing about launching this fund today as opposed to 20 years ago is that there's so many companies that are already public in our world...We have over 250 names that we can invest in on the long side and given that the internet is disrupting so many traditional companies, we have hundreds of more names to choose from on short side.”
Wyman intends to capitalize on the general shift to mobile devices (smartphones and tablets) and the phenomenon of emerging countries “skipping traditional telephony going straight to smartphones,” both of which are driving rapid growth in the internet space.
Internet users will double in the next three to four years, said Wyman, and “there's a tremendous amount of work that needs to be done to create a mobile world,” including building out infrastructure to support the cloud, where content will be stored.
“What we're looking for are companies...that are defining new sectors of the internet industry,” said Wyman. “We want no two companies to be alike, so they're remarkably diverse and different...They could be in the mobile payment space, they could be online gaming, they could be online education, they could be online commerce, they could be building infrastructure for the cloud. We're looking for a lot of diversity because that lowers the risk of the portfolio...
“They have to be growing very dramatically...they need to double in size within the next three years, and they have to be profitable.
“One of the nice things about the environment we're in today is, unlike 10-15 years ago when internet companies went public based on multiples to revenues or numbers of eyeballs, many of these companies are being held private much longer than ever before and so by the time they go public they're nicely built out and their numbers are extremely profitable.”
Wyman feels a hedge fund is better suited to this market than a mutual fund which can only go long:
"[T]he beauty of our long/short fund, obviously, is that we can pull in our horns and protect capital” in down markets and “if we're really good at what we're doing, we can short many of the names that we had long for so many years...because they'll correct rather dramatically in a down market.”
Minimum investment is $1 million, the fund administrator is Conifer and the prime broker is JP Morgan.