Key Takeaways
- • Wasatch Long/Short Alpha Fund's short position in Asana (ASAN) delivered substantial gains in Q1 2026, with Asana identified as the largest contributor to fund performance on the short side as the stock declined significantly.
- • Asana stock fell 47.25% over the past 52 weeks, closing at $8.68 per share on June 2, 2026, with a market capitalization of $1.84 billion, reflecting persistent weakness in the cloud-based work management software company despite short-term recovery.
- • The Wasatch Long/Short Alpha Fund (Investor Class) outperformed the Russell 2500 Index in Q1 2026, returning 4.16% versus 2.04% for the benchmark, driven materially by short position gains including the Asana position.
- • Asana's operational challenges include a negative 20.9% average operating margin over the past year, typical of unprofitable high-growth software companies with expensive cost structures relative to revenue generation.
- • Short interest in Asana stood at 35.03% of float as of May 29, 2026, with 32.18 million shares sold short, reflecting sustained bear thesis conviction among institutional short sellers.
Summary
The Wasatch Long/Short Alpha Fund achieved notable outperformance in the first quarter of 2026, returning 4.16% for its Investor Class shares compared to a 2.04% return for the Russell 2500 Index. According to the fund's Q1 2026 investor letter, this outperformance was substantially driven by the fund's short positions, which benefited as stocks in the portfolio declined in price. The geopolitical environment during the period, marked by tensions with Iran and investor concerns about oil price implications, combined with a market correction in U.S. small- and mid-cap equities, created favorable conditions for the fund's short book despite broader enthusiasm for AI-related infrastructure stocks.
Asana, Inc. (NYSE: ASAN), the cloud-based work management software provider, emerged as the single largest contributor to fund performance on the short side during the quarter. Managed by Wasatch Global Advisors, the fund held a significant short position in Asana, capitalizing on the company's pronounced stock weakness. Over the past 52 weeks, Asana shares declined 47.25%, though the stock recovered 16.69% over the one-month period ending June 2, 2026, when it closed at $8.68 per share. The company's market capitalization stands at $1.84 billion, reflecting a substantial valuation contraction from higher levels.
The fundamental weakness underlying Asana's stock performance reflects operational challenges typical of unprofitable high-growth software companies. The company has maintained an average operating margin of negative 20.9% over the past year, driven by expensive cost structures and aggressive spending to capture market share rather than near-term profitability. This margin profile, combined with challenging market conditions for software stocks during the period, validated the fund's thesis on the short position. Short interest in Asana remained elevated at 35.03% of float as of May 29, 2026, representing 32.18 million shares sold short, indicating sustained conviction among institutional investors on the bearish case.
The Wasatch Long/Short Alpha Fund's positioning demonstrates the tactical opportunity available to disciplined long/short strategies during periods of market volatility and sector rotation. By maintaining meaningful short exposure to fundamentally challenged companies like Asana, the fund generated risk-adjusted returns above its small-cap benchmark despite the broader market environment characterized by selective enthusiasm for AI-related equities and geopolitical uncertainty.
Asana, Inc. (NYSE: ASAN), the cloud-based work management software provider, emerged as the single largest contributor to fund performance on the short side during the quarter. Managed by Wasatch Global Advisors, the fund held a significant short position in Asana, capitalizing on the company's pronounced stock weakness. Over the past 52 weeks, Asana shares declined 47.25%, though the stock recovered 16.69% over the one-month period ending June 2, 2026, when it closed at $8.68 per share. The company's market capitalization stands at $1.84 billion, reflecting a substantial valuation contraction from higher levels.
The fundamental weakness underlying Asana's stock performance reflects operational challenges typical of unprofitable high-growth software companies. The company has maintained an average operating margin of negative 20.9% over the past year, driven by expensive cost structures and aggressive spending to capture market share rather than near-term profitability. This margin profile, combined with challenging market conditions for software stocks during the period, validated the fund's thesis on the short position. Short interest in Asana remained elevated at 35.03% of float as of May 29, 2026, representing 32.18 million shares sold short, indicating sustained conviction among institutional investors on the bearish case.
The Wasatch Long/Short Alpha Fund's positioning demonstrates the tactical opportunity available to disciplined long/short strategies during periods of market volatility and sector rotation. By maintaining meaningful short exposure to fundamentally challenged companies like Asana, the fund generated risk-adjusted returns above its small-cap benchmark despite the broader market environment characterized by selective enthusiasm for AI-related equities and geopolitical uncertainty.
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