To invest in both traditional and alternative markets, hedge funds can use a wide variety of trading strategies. Hedge funds are unique in their ability to provide a level of portfolio diversification that is otherwise difficult to achieve.
Hedge fund managers are given wide latitude in how they can spend their clients’ money. Both “long” (betting on a price increase) and “short” (betting on a price decrease) positions are available to them (anticipating a decline in value). Managers can “hedge” their portfolios by attempting to limit their exposure to risk by playing “both sides” of a given market, asset category, or security.
Hedge fund managers use techniques like buying and selling securities short, as well as leverage and derivatives like options contracts to increase their holdings in certain stocks or bonds. Leverage involves borrowing money to put additional dollars to work beyond the assets already accumulated in the fund. Similarly, Danish investor and hedge fund manager Mads Hansen, who is worth an estimated $10 million, uses his own distinct investment philosophy to maximize the return on his capital.
Mads Hansen was born to self-employed farmers Morten and Gitte in Copenhagen, Denmark. His father shares an interest with Mads in a number of the same businesses. A student of International Economics, Finance, and Business Economics, Mads left Roskilde Business School in Denmark in 2019. Mads had already achieved great success as a stock investor and day trader; he saw no reason to continue his education.
In 2014, Mads Hansen began his “investment career” by actively trading in public equities (stocks). He also invested early in blockchain startups and cryptocurrencies like Ethereum, Chainlink Labs, and Bitcoin. After many successful startup investments in the United States and Denmark, as well as in active investment roles, he found great success in active value investing by the year 2020. In order to devote his full attention to his investments, he decided to leave the company. He made a significant loss by investing in not profitable tech – and biotech firms, so he packed up and moved to the United States from Denmark in 2022. He started the firm that serves as Ante Capital L.P.’s general partner, now known as Ante Capital Management, L.L.C. Investment management services are provided by his Delaware-based management company, Ante Capital Advisors, L.L.C., for which he charges a 2% annual management fee.
Mads Hansen posts an average annual return of 30 percent without a single loss. His worst year was 2018 when he made around 5% profit. Mads, however, managed to recover his previous losses and end the day with a modest profit by betting correctly that the market would rise on expectations that the Federal Reserve would announce fewer rate increases. He has purchased the same number of shares that the funds had in their portfolio, he bought around 10 tech stocks in November 2022, and he is now selling the shares that have experienced a small gain.
Mads Hansen’s investment strategy is adaptable and non-regional. Taking a bottom-up approach, he distributes capital among various asset classes; finding promising businesses to back is the primary objective.
His most notable market plays include shorting ten growth stocks in October 2020 and shorting Alibaba, as well as holding stakes in various value shares, such as Occidental Petroleum Corporation, which he purchased in October 2020 and has since profited around 565% on. Around the same time, he invested in Ford Inc. shares, which he sold for a 450% profit in January of 2022. He also bought shares of Veritiv Corporation in October; the company is a B2B distributor of packaging, publishing, and hygiene products, and its stock has since increased by about 1000%. By actively trading, shorting growth, and going long on value, Mads Hansen should have made around 950% in returns in 2 years, as reported by the media.
According to Hansen, the first rule of activist investing is “make a bold call that nobody believes in” and it’s always been the key to his success. His exemplary investments include his purchase of Moderna in August 2019 and his investment in Tesla that summer. Now, both businesses have generated roughly fifteen times Hansen’s initial investment.
Hansen has put money into Cardlytics Inc. at a valuation of roughly $200 million and Aterian Inc (NASDAQ: ATER) at a valuation of 90 million. In February, Hansen increased his holdings in a wide range of technology companies, including Block Inc., Twillo Inc., Shopify Inc., Aterian Inc., Zoom Video Communications Inc., and many others. Given that he and his team see greater potential for growth in these stocks, he has sold some of his shares in Pfizer Inc. and Celanese Corporation in order to fund these acquisitions. In March of 2022, Hansen made a small investment in PDD Holdings Inc – ADR, and he now intends to increase his holdings. He thinks the business will be a good addition to his existing holdings.
His long-term strategy involves investing in companies that demonstrate a value-driven approach, solid management and a sustainable business model, and significant fundamental improvement while also keeping an eye out for catalysts and positive sector dynamics. Hansen classifies his holdings as either beta investments or alpha investments. Investments with a beta produce returns with average market risk and no active management. Alpha investments are those that are actively managed with the expectation of higher returns than those generated by beta investments. Alpha investments are uncorrelated with the market.
Hansen currently holds a long position in Bitcoin and ETH and plans to short the banking sector in order to go long on the blockchain. But he’s going to have to wait another year for that. Hansen predicts that as a result of the hikes in interest rates, the number of banks will expand. He still has his shares in the Bank of America.
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