I often hear Viking described as a higher turnover shop relative to other SM funds. However, Viking's website says "We seek investment opportunities with compelling risk-adjusted return potential through our long-term fundamental research". Which is it? In practice, what kinds of holding periods are Viking analysts/PMs underwriting when evaluating a new idea?
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Viking's investment approach combines elements of both long-term fundamental research and a potentially higher turnover compared to other similar funds. This dual nature means that while Viking emphasizes long-term fundamental research in their public communications, the actual practice within the fund might involve shorter holding periods depending on market conditions and the specific strategies of individual portfolio managers (PMs) and analysts.
Here's how this works in practice: - Long-Term Focus: Viking's stated strategy involves seeking out investment opportunities that offer compelling risk-adjusted returns through long-term fundamental research. This suggests that when analysts and PMs evaluate new ideas, they are encouraged to think about the long-term potential and sustainability of the investment.
Operational Reality: Despite the long-term focus, the nature of the fund and its structure might lead to higher turnover rates. This could be influenced by the performance expectations set for PMs, the competitive environment within the fund, and the fund's overall risk management strategies. Analysts and PMs might find themselves balancing between long-term value creation and short-term performance metrics.
Underwriting New Ideas: When underwriting new ideas, Viking analysts and PMs likely consider a range of holding periods. They assess how an investment fits both short-term market movements and long-term strategic goals. The exact holding period can vary significantly based on the specific market sector, the nature of the investment, and prevailing economic conditions.
In summary, while Viking promotes a long-term investment philosophy, the practical holding periods can vary, reflecting a blend of strategic long-term goals and responsive short-term tactics. This flexibility allows Viking to adapt to different market scenarios while still aiming for strong long-term returns.
Sources: Any info on Viking?, How does LT investing work?, https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1, Q&A - Tiger Cub Analyst
I wouldn't read too much into these blurbs on fund websites as they are largely boilerplate and everyone's read pretty similar. Exception to that rule would be on the extreme ends. Generally speaking, I think Viking's rep is that they sit somewhere in the middle of the pods (ie calling quarters) and other Tigers which are prob more in the 18-36mo outlook (talking longs).
Are the other cubs really even 18-36 months these days?
No lmao not even close
Why does it matter? They’re just trying to make money like anyone else. They’ve been in stuff for 5+ years and 1 quarter (yes). Not quite sure what this obsession with time horizon is
The name of the game is just to make money
Because time horizon is a function of strategy, which is definitely something to obsess over?
IMO the only people really rigid about time horizon are people trying to justify poor mid/short term performance. Variant views have a range of horizons, and those variant views can correct quickly or slowly
Not always. You can have the same fundamental strategy but just try to exit earlier. If your price target has been achieved in 2-3 months why hold it for another 2 years? Investing should be about price not about duration.
Just because you hold a position for years does not mean you aren’t actively trading it (scaling up/down/hedging with new information and conviction) which is where a lot of PnL is generated
Agree with your point here, was more talking about the time horizon for the thesis to play out in numbers vs your actual hold period. Even if you are at a "longer term" shop you'll have some positions you hold for a quarter (either on pull forward of the return or you got it wrong and are punting) and some for 5+. More of what I (and i think OP) is getting at is again on time hoirzon for thesis / path to getting paid. For pods, certainly medium / longer term trends / views are important, but much more of a focus on the catalyst path for the month / quarter and how that compares relative to the rest of their names. Comparitively, at a lot of SM, you can be in a position knowing you may not get paid on your views NT. Agree that you are still "quarter aware" and are likely doing tactical trims / adds if the NT setup is attractive but that is more ancillary to the investment process vs it being core.
To your point, neither is right nor wrong as the end goal is making money (shout out the LPs). But do think it is important to recognize there are differences and some folks are going to be better suited in one enviornment over the other
Agreed.
Look at turtle creek - same few positions but always actively monitoring them and loading up / unloading depending on short-term movements.
There’s a saying at Viking that “3 years is just 12 quarters” which I think tells you a lot. Would agree they’re probably looking at a 12-18 month time horizon if they’re truly being honest about it.
How can you be at a hedge fund and not be focused on the quarters? Doesn’t make sense
This isn’t Berkshire hathaway. You’re getting paid to print for your LPs, so you can’t just eat bad returns hoping your thesis will play out and expect to get paid for it. There are more effective ways for an LP to make money
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