[Asia Economy Reporters Byunghee Park, Hyunjin Jung] As the tech stock plunge continues, hedge funds, including Tiger Global, a symbol of tech stock investment funds, are rushing to cut losses one after another. As the stock market shows a downturn, Warren Buffett, chairman of Berkshire Hathaway, said, "Be greedy when others are fearful," and started buying undervalued energy stocks.
On the 16th (local time), the Financial Times reported, citing documents submitted to the U.S. Securities and Exchange Commission (SEC) that day, that the value of Tiger Global's stock holdings fell sharply from $46 billion (about 59 trillion won) at the end of last year to $26 billion (about 33 trillion won) at the end of the first quarter this year. This represents a loss of about 26 trillion won due to the tech stock plunge that has continued since November last year throughout this year.
During the first quarter, Tiger Global sold all its shares in U.S. online dating platform Bumble, shared accommodation company Airbnb, and Chinese ride-hailing service provider Didi. It also sold about 80% of its stake in online stock trading platform Robinhood and disposed of a significant portion of its shares in home training platform Peloton. Foreign media reported that it also sold some shares of streaming service provider Netflix and electric vehicle manufacturer Rivian.
Foreign media interpreted Tiger Global's retreat as a significant turning point. Tiger Global was launched with the support of Tiger Management, founded by Julian Robertson, a famous hedge fund manager, and Chase Coleman, a former tech stock analyst. It has been a hedge fund investing mainly in tech stocks such as global internet, software, consumer, and financial technology. Earlier, Bloomberg reported that Tiger Global suffered a 44% loss through April. Tiger Global explained, "Considering the macroeconomic background, the market was not cooperative." Besides Tiger Global, other hedge funds have also recently re-evaluated tech stocks after the COVID-19 pandemic and have been selling off their tech stock holdings one after another.
The fallout from the so-called Big Tech (large information technology companies) plunge is also affecting tech startups. On the same day, the U.S. Wall Street Journal (WSJ) reported in an article titled "The party for tech startups is over" that venture capitalists are showing caution in investing in tech startups.
According to market research firm PitchBook, venture capital investment in startups reached a record high of $95 billion in the fourth quarter of last year but decreased by 26% in the first quarter of this year compared to the previous quarter. Venture capitalist David Sacks evaluated that due to a lack of funds, the sentiment in Silicon Valley has turned the most negative since the dot-com bubble burst over 20 years ago.
As the stock market, centered on tech stocks, has been on a downward trend this year, the "investment genius" Buffett has started buying at low prices. According to a report Berkshire submitted to the SEC that day, Berkshire's cash holdings, which were $146.7 billion at the end of last year, decreased to $106.3 billion as of the end of March. In particular, Buffett purchased 901,768 shares of Occidental Petroleum stock just last week. Berkshire began buying Occidental shares at the end of February, and it appears that Occidental has become one of Berkshire's top 10 investments. In addition, Berkshire has significantly increased its shares in Chevron over the past few months. While the S&P 500 has fallen 16% this year, Occidental's stock price rose 121%, and Chevron's rose 43%.
However, there are concerns that the bottom of the stock market has not yet been confirmed. Michael Wilson, an investment strategist at Morgan Stanley, predicted in a report that the S&P 500 index could fall to the 3400 level. This would be 15% lower than the closing price of 4008.01 on that day. Wilson said that the risk of recession has recently increased significantly, and in this regard, stock prices seem somewhat high.
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