A high-performance London-based hedge fund is betting on Meta

Tech stocks have had a ruthless year so far as layoffs, inflation and higher and higher interest rates roil the tech industry. Now, things are entirely different for Big Tech compared to last year. Brutally, none of the 15 most valuable US tech companies delivered positive returns in 2021. This month last year, the tech-heavy Nasdaq peaked above 15,000, which is double the lows during the pandemic. But now, the index is at about 11,000, so the past year’s drop resulted in a roughly US$7.4 trillion loss for investors.

As for Meta (formerly known as Facebook), its shares have shed over 70% this year. Meta just sank to new lows below US$90 earlier this month. Its CEO, Mark Zuckerberg, is super committed to building the expansive metaverse, which perplexes Wall Street since it's lost US$9.4 billion so far this year. The company said it expects things to balance out beyond 2023, but only time will tell.

Some people still believe Big Tech will make a comeback. One London-based hedge fund – Liontrust GF Tortoise Fund– is putting its money on Meta. The fund’s manager describes it as a "value-focus hedge fund,' and you could say Meta share are pretty cheap at the moment. So, Tortoise went against the tide when it took a long position last month on Meta. The fund says the company’s high net cash position, growing user numbers and cost-cutting maneuvers make it a promising buy for the long-run.

Key comments:

"We've got a long book of companies who we think are too cheap and a short book of companies who we think are too expensive, we occasionally do a bit of FX hedging and that's it, there's nothing particularly fancy going on, such as high frequency or derivatives," said Liontrust GF Tortoise Fund's manager, Tom Morris, to Bloomberg.

"In 2023, we're going to focus our investments on a small number of high priority growth areas. So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today," Zuckerberg said on an earnings call in October.

"Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run," Meta said in October.