 In This Issue
The Sharpe Angle Interview: Ulrike Hoffmann-Burchardi Tudor portfolio manager on where she's finding alpha in the tech sector  It's not easy being a tech investor these days.
The strategy returned nearly one-seventh that of the S&P 500 in 2021, according to HFR, and performance has only gone downhill from there.
So when I heard about Ulrike Hoffmann-Burchardi launching a new tech-focused, long/short equity strategy within Tudor Investment Corp., called T++, I wanted to get a sense of how she sees this choppy market and where she's putting capital to work.
On the long side, Hoffmann-Burchardi favors semiconductors and data infrastructure. She said both are "indexed to the amount of data growth." The prevalence and growth of data usage is part of her investing strategy, and she sees those two sectors as the modern day "picks and shovels" for data gold rush.
But I was also curious how she was hedging.
"At this point, we're probably overdone on some of the growth, software selloff," she said. "It's more about going into hedges that now help you price in maybe an overall slowdown on the index level…much more so than in those particular areas of technology."
She describes the "sharp corrections in high-growth software" as having more to do with "positioning and flows than they do with fundamentals." She said she thinks there's "probably some technical rebound" here in the short-run, while noting that long-term performance in this space will be dictated by rates.
This influences the IPO market as well because software has comprised such a large proportion of the pipeline. Recently, post-IPO performance has been abysmal. Hoffmann-Burchardi said this "valuation reset has put the spoke in the wheel of new issuance."
"I do think this will change very quickly once valuations recalibrate," she said. "The pace of innovations is accelerating and I think the appetite to be invested in the winners of the future is unabated."
Record IPO rush of 2021 led to historically dismal returns for investors with no relief in sight IPO investors in a record-breaking issuance rush in 2021 have so far been disappointed by dismal returns, and the outlook for the once-booming market is only getting worse with rising rates and insider selling on the horizon.
Last year, the number of U.S. traditional IPOs climbed to the highest levels since the late 1990s and deal value hit record levels, according to Dealogic. So far performance from these public debuts has been lagging their historical average significantly.
2021 deals have fallen 14% on average in the six-month post-IPO period, compared to a historical average of 14%, according to Bank of America.
"High IPO supply, the anticipation of higher Fed Funds rates, a historically extreme proportion of early-stage/non-earning companies, plus perhaps some investor fatigue around learning so many new companies took a toll," Thomas Thornton, a managing director at Bank of America, said in a note. 
Amid expectations for higher interest rates and a return of volatility, the market swiftly rotated away from risky, growth-oriented companies, especially hurting small-cap IPOs and those that have a long roadmap to profitability.
Electric pickup maker Rivian Automotive was one of the biggest IPOs of 2021 with its market cap briefly topping traditional automakers like Ford and General Motors. However, the stock has wiped out all the post-debut pop, trading about 12% below its IPO price.
"I think there's no doubt that the IPO market will slow down this year," said Ulrike Hoffmann-Burchardi, portfolio manager at Tudor Investment Corp. "We have seen, especially in software, which is probably 90% of the tech IPO pipeline, now a drastic reset in valuations."
Tech stocks are seen as sensitive to rising yields because increased debt costs can hinder their growth and can make their future cash flows appear less valuable.
"We have to see rates stabilize," Hoffmann-Burchardi said. "When the volatility and interest rate move is that large, it's going to be very hard for valuations to find and recalibrate itself."
Meanwhile, many IPOs done in the second half of 2021 will experience lockup expiration sometime in the next six months. An IPO lock-up period is typically 180 days where company insiders can't sell their shares. 
Delivering Alpha Headlines Big thoughts from the big money Bill Ackman calls for a half-point Fed rate hike in March Hedge-fund manager Bill Ackman said the Federal Reserve has lost its credibility as an inflation fighter, so it should raise its key interest rate by a bigger-than-expected 50 basis points in March to regain trust. "The [Fed] could work to restore its credibility with an initial 50 bps surprise move to shock and awe the market, which would demonstrate its resolve on inflation," Ackman said in a tweet over the weekend. The central bankers have signaled three rate increases this year and a tapering of their asset-purchases. The Fed hasn't hiked rates by more than 25 basis points at a time since May 2000.
Bill Miller now has 50% of his personal assets in bitcoin Bill Miller's craze for bitcoin continued to make his personal wealth swell. Bitcoin now represents 50% of Miller's personal assets after buying the dip in the cryptocurrency around $30,000, the longtime investor revealed. He started buying bitcoin around $200 to $300 years ago, and now the digital coin trades around $43,000 and hit an all-time high last year above $68,000. The crypto bull said he's also been adding to bitcoin-related stocks in his personal portfolio, such as newly public bitcoin miner Stronghold Digital and software company MicroStrategy, which rallied 40% in 2021. Paul Tudor Jones says pandemic trades face 'tough sledding' Billionaire hedge fund manager Paul Tudor Jones said stocks that performed the best since the depths of the Covid pandemic are going to have a rough time as the Federal Reserve embarks on its tightening cycle. "Clearly all the inflation trades of the pandemic are going to be challenged right now," Jones told CNBC. "I think it's going to be tough sledding for the inflation trades of the pandemic going forward. ... Things that performed the best since March 2020 are probably going to perform the worst as we go through this tightening cycle."
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