Valiant Capital Partners posted one of the best monthly gains in the firm’s 17-year history.
The Tiger Grandcub headed by Chris Hansen jumped 11 percent in October and is now up 45 percent for the year, making it the top-performing hedge fund with ties to Julian Robertson Jr., according to Valiant’s third-quarter client letter, obtained by Institutional Investor. As usual, the quarterly letter provides detailed insight into the hedge fund’s performance drivers and Hansen’s thinking.
Valiant can thank its big bet on the power industry for the gains. Its power-related stocks surged 84 percent for the year through November 10, according to the letter. Meanwhile, its Power SPV rose an additional 13 percent in October and is up 64 percent for the year, an investor says.
“With data center capacity being extremely tight once again, and capex continuing to rise from hyperscalers, sovereigns, and other players in the AI space, fears of a sudden AI bubble burst now look grossly unwarranted in the short-to-intermediate term,” Valiant states in the letter.
In fact, Valiant notes, when its stocks sold off earlier this year on the DeepSeek news and tariff fears, “not only did the team not waiver, but they used the opportunities to add to our highest-conviction names — which obviously has been a big driver of performance.”
Through the first nine months of the year, Valiant’s long book kicked in 44.7 percent to gross performance and shorts detracted just 6.7 percent. “YTD . . . both our longs and shorts are outperforming by a wide margin,” Hansen says. The portfolio currently has a roughly 240 percent gross equity exposure and a 59 percent net equity exposure.
In the third-quarter letter, Hansen reminds investors that his central thesis on the power industry is that the wider market still does not understand how broad-based power demand is, how tight the U.S. power market is, and the implications of the constraints on supply.
“This is evident in the expanding backlog of suppliers of critical infrastructure like utility-scale gas turbines and power transformers, as well as in the desperate pursuit of previously uneconomical stopgap solutions like natural gas engines and battery farms being deployed,” Hansen elaborates. “And we believe this desperation will continue to grow in the coming quarters and years as the supply demand imbalance invariably becomes more pronounced.”
He adds that given the imbalances the firm sees, it believes most of the remedies being thrown at the problem will only modestly reduce the imbalance. “Our research predicts that the U.S. as a country will fall below the minimum threshold for power supply to consumers and corporate/industrial customers within the next five years,” he asserts.
One potential solution is nuclear power. But Hansen notes that small nuclear reactors are years away from being deployed in a material way and that no reactor is yet operational in North America. He points out that the U.S. recently announced it will be fast-tracking and investing in new large nuclear reactors with the hope of getting ten gigawatts of nuclear sites up and running in the next ten to 15 years. But Hansen is skeptical of that as a near-term solution.
“With the U.S. having not built a greenfield nuclear plant in over 40 years, and regulatory, environmental, and construction time delays that are an inevitable part of the process, we would say that the stated timeline looks very challenging,” he explains.
Besides, this incremental ten gigawatts of power would amount to only 6 percent of the growth in power demand by 2030 that Valiant is projecting. “So while opening up new large nuclear reactors is certainly a step in the right direction, it is unlikely to have a material impact in solving the growing supply demand imbalance in new generation, and does almost nothing to solve the need for expanded and upgraded transmission and distribution equipment that has been woefully neglected for decades and is the real pinch point for power consumption,” Hansen says.
Rather, a significant advancement in fusion, utility-scale battery technology, or another currently unforeseen development would be required to address the issue meaningfully, he adds.
“While such progress is possible and should be monitored, our current research has led to increased confidence in the sector and the companies we own — not less — as we believe the time frame under which such breakthroughs could scale remains well into the future,” Hansen states. “And despite the strong upward price movements in power stocks, when we look at our 2027–’28 earnings estimates, we believe most of our holdings continue to trade at a significant discount to the broader market.”
