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Little Known Fund Manager’s 11 Year Bet On Avis Nets Him $2 Billion And His Investors 35% Returns For 2021

Courtesy of ZeroHedge View original post here.

Little known hedge fund manager Karthik Sarma is the $2 billion story that no one has every heard of – until this week.

This week, Bloomberg profiled how 47 year old Sarma, who runs SRS Investment Management from a "modest" home he shares with his sister and her family in a New Jersey suburb, beat well known hedge fund managers thanks to an "11 year old wager on Avis Budget Group" that paid off as the stock rocketed 456% in 2021. 

The fund, which has about $8 billion under management, owned about 50% of its Avis position using common stocks and swaps, which resulted in Sarma's investors seeing a 35% gain in 2021. Sarna's personal net worth "roughly tripled" to $3 billion as a result of the bet.

He was topped on Bloomberg's 2021 hedge fund rankings only by Citadel’s Ken Griffin and TCI Fund Management’s Chris Hohn, Bloomberg reported this week. 

Sarma runs his fund by using a "robust short book" while avoiding hefty leverage. He used to work for Tiger Global Management founder Chase Coleman, whose hedge fund fell from Bloomberg's rankings due to market volatility. 

He usually holds about 25 stocks on the long side and 35 stocks on the short side. This makes his net exposure "generally lower" than peers, the report says. He invested in Avis because he had "taken a long-term view that companies able to manage fleets of cars and trucks in a cost-effective manner will be extremely valuable in the future of human transport."

He came to the U.S. to get a master’s degree in operations research from Princeton University before joining Tiger Global in 2001. There, he was considered the firm's "most talented non-partner", Bloomberg wrote. He went off on his own 5 years later and started his own firm. Initially, he made money on bets 

Names like Viking Global Investor’s Andreas Halvorsen and Melvin Capital Management’s Gabe Plotkin were also absent from the list. 


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