Honeycomb Asset Management
Honeycomb Asset Management is only five years old, but founder David Fiszel has been thinking about it for at least 20.
It's Fizsel's second spin at running his own fund – he launched the short-lived Rhombus Capital Management in 2004, when hedge funds could be "two guys and a Bloomberg," and closed it three years later. He believes Honeycomb is the product of a more measured approach to firm-building, and the fund is coming off the best year in its history.
"I think I had some maturing to do, and running a business is a lot different than just stock-picking," he said in an interview with Insider. The former Point72 and Omega Advisors money manager laid out how he's reacting to the current investment landscape and market phenomena with the training from his old bosses as his guide.
"I got my undergraduate degree in stock-picking from Lee Cooperman and got my Ph.D. in risk management from Steve Cohen," he said.
His experience paid off last year in a big way. Honeycomb returned 58%, besting the average fund return of 11.6% —the big year helped push firmwide assets to roughly $1.5 billion. Through the first half of this year, the fund is up more than 7% thanks to a 5.1% gain in June, though it trails the average fund, which was up 10%, according to Hedge Fund Research.
Peloton, Bombas, and voice-recognition softwareWhile a majority of Honeycomb's assets are invested in the public markets, Fiszel has been a player in the private markets going back to his time at Point72, where he invested in Twitter and Palantir before they went public.
Honeycomb now has stakes in sock-maker Bombas, e-commerce company Farfetch, and payments start-up Klarna, which raised a $639 million round in June led by Softbank that Honeycomb has a part of.
Fiszel doesn't see that much difference between investing in large private companies and public companies. For instance, he considers himself "the same analyst for Instacart and DoorDash."
"The namesake of our firm is natural and organic growth," he said. "We like investing behind trends."
And while the firm sells out of positions once they hit their price target, they will hold onto their stakes after a company IPOs. Peloton is now a position in their public portfolio, but Honeycomb originally invested when the workout equipment-maker was a private company.
Another trend the company is following is the explosion in buy-now-pay-later payment options. Fiszel believes there is a "secular change" pushing people away from credit cards to companies like Klarna and Afterpay, both of which are in Honeycomb's portfolio.
He's also excited about voice-recognition software, telling Insider that the days of telling your car to "drive to Grandma's" isn't that far away.
'Process over outcome'Determining how much a company is worth shouldn't be so difficult thanks to the countless tools and datasets top investors have at their fingertips, but the retail trading phenomenon has tripped up some of the best money managers in the game.
If the Reddit crowd were to pile into one of his holdings, Fiszel said the team would first determine if the retail traders are seeing something his team missed. But if their original price target still makes sense, they'd sell, even if day traders push the stock even higher.
"If nothing's changed, we have to stay disciplined. Process over outcome is what we focus on," he said. "If we won because the Reddit crowd took a stock up to $100, I don't know if I can do that every time."
Neglecting your own rules is when you end up relying on luck, not skill, he added.
"It's when you try to copy someone else, and try to do something that you think you should be doing but don't really know what you're doing, that's when you run into trouble," he said.
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