JAT Capital Management is $3 billion tech focused global long/short equity hedge fund started by John Thaler in November 2007. Thaler began his career in the Investment Banking division of Merrill Lynch in New York City after earning his BA in economics from Chicago University. Later he joined Boston based private equity firm Spectrum Equity Investor. After spending two-and-a-half year with Spectrum, Thaler moved back to New York and joined Chris Shumway as an analyst in 2002, the same year when Shumway Capital Partners LLC (SCP) was launched. Since his early days in Spectrum Equity, Thaler had tracked telecom, technology and media and employs and employs the private equity approach to investment. Chris later made him the portfolio manager of the Shumway Capital Omni Fund, an internal, separately funded vehicle that traded in telecom, media and technology securities.

Thaler left Shumway Capital in 2007 to start his own hedge fund JAT Capital that November with $220 million in assets. Chris provided the start-up capital and Thaler started operations with 90 per cent of its investments in technology, telecom and media. JAT Capital now holds half of its assets in those industries and half in industrial, consumer and gaming companies – the main driver of profits in 2011. The fund returned -5.9 per cent in 2008 compared to S&P’s -37 per cent. However, JAT was up 23.2 per cent up gross in 2009.

JAT Capital had managed to return 31% through September in 2011 as Thaler’s market neutral positions drove returns. However, the fund suffered a setback when its $577 million investment in Netflix plummeted by nearly 50% to $311 on October 25 after the mail-order and online video service provider announced it lost 800,000 customers in the third quarter in 2011, and predicted further cancellations due to price hike. Thaler’s another big holding – Big Mountain Coffee, was down 10.3 per cent till end October, 2011.

However, JAT Capital has managed to return 13 per cent in 2011 through end October, 2011. It’s neutral and short positions had offset most of its losses from long positions. It was revealed that JAT had about 200 percent exposure through leverage to amplify longs and shorts, and a market neutral position through zero net exposure. JAT had been investing in companies with market capitalization of less than $10 billion, and majority holding could be liquidated within five business days.