A onetime Hedge Fund Rising Star has found his stride with his long-only fund.
William Heard’s Heard High Conviction Long Only Fund was up about 21 percent for the year through May after posting gains of 19.2 percent last year and 8 percent for the six months of 2019 after it launched, according to a person who has seen the results.
Today Heard Capital has about $425 million under management, most of it in the long-only fund. This is more than quadruple what Heard was managing just two years ago when he was named a Rising Star by Institutional Investor.
As a result, Heard recently told investors in a client letter seen by II that on August 1 he is closing the Founders Class of the Heard High Conviction Long Only Fund to new investors. It will remain open to new subscribers on nonFounders Class terms.
Meanwhile, Heard is poised to present a “best idea” at the Robin Hood Investors’ Conference this Wednesday in New York.
After graduating Marquette University, Heard spent four and a half years at credit-oriented hedge fund giant Stark Investments as a special-situations analyst, focusing on telecom, media, tech, industrials, financials, and energy.
At 26 he started drawing up a business plan for his own hedge fund firm — and at the same time hedged by attending graduate school at the University of Chicago. When Madison Dearborn Partners co-founder John Canning Jr., whom Heard had met years earlier at an investment conference, agreed to be a day-one investor, Heard quit business school and launched his firm in 2010. He began operations the following year.
Heard Opportunity Fund, launched in July 2011, has experienced mixed success. The longshort fund had a little more than $58 million in assets at the end of March.
It was up 14.8 percent through May after losing about 7 percent in 2020, according to a hedge fund database. It has generated a 6.5 percent annualized return since its inception.
Clearly, the long-only fund is the star of the show. It is a strategy Heard had been running all along until he decided to launch the dedicated fund.
Inside Heard’s Portfolio
Heard’s funds focus on five sectors: technology, media, telecom, financials, and industrials.
The long-only fund does not use any leverage, and makes little or no investments in the so called FAANG stocks and private companies, the areas that have driven many other techoriented hedge funds for the past few years.
“Two of the hallmarks of Heard Capital’s investment philosophy are seeking companies with strong alignment of interests between management and shareholders and investing with a multi-year horizon,” Heard explained in a recent letter to investors.
The firm’s U.S. stock portfolio is pretty concentrated with just 24 individual common stock long positions at the end of the first quarter, according to its most recent 13F regulatory filing. Many of them have been held for a number of years.
Its seven largest positions accounted for the bulk of the assets, according to the filing. They were led by alternative investment giant Blackstone Group, telecom real estate investment trust American Tower, aerospace parts maker TransDigm Group, credit agency FICO, software giant Adobe, investment firm BlackRock, and defense contractor Lockheed Martin.
This year’s gains have been led by Blackstone, BlackRock, and BlackBerry.
Blackberry, a relatively smaller position, was one of those stocks deliriously bid up by the Reddit crowd in January before falling back to its pre-speculative levels.
According to a person familiar with Heard’s portfolio, the firm initiated its position in November and significantly reduced its position beginning in January.
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