A secretive credit hedge fund known for its bets during the 2008 financial crisis is benefiting from one of the best returns of the year, while leaving investors concerned about its exposure to a volatile artificial intelligence stock.
Magnetar has resurfaced on Wall Street this year with a canny wager on CoreWeave that has generated massive paper profits, driving its returns to about 56 per cent this year, according to people familiar with the matter.
The hedge fund’s gains have largely been generated by its stake in the AI data centre operator, which was worth more than $11bn in August and represented roughly 29 per cent of CoreWeave’s publicly traded class A stock, according to regulatory filings.
Within just six months, the hedge fund’s investment in CoreWeave has become by far the largest position in its portfolio, with about half of its total assets tied up in the New Jersey-based group’s equity. However, its overall investment in CoreWeave was only about $500mn, according to two people familiar with the matter.