The Triumph of the Tiger Cubs
Lance on Jan 15 2008 at 12:58 am | Filed under: Absolute Return, Asset Allocation, Hedge Funds, Latest data, Risk
For investors with the assets to use a full fledged fund of hedge funds, who do we turn to? A collection of Tiger Cubs who had a fine year, so this does not surprise us. From Bloomberg:
Hedge-fund managers known as the Tiger Cubs because they learned to pick stocks at Julian Robertson’s Tiger Management LLC beat their peers in 2007 by profiting from the most volatile equity markets in five years.
Chase Coleman’s Tiger Global Management LLC in New York, which was backed by Robertson, returned 71 percent after fees, fund investors said. John Griffin, the former Tiger Management president who oversees $7 billion at New York-based Blue Ridge Capital LLC, posted a 65 percent increase.
Tiger alumni including Lee Ainslie, Andreas Halvorsen, Paul Touradji, Stephen Mandel, Bill Hwang and Chris Shumway showed gains last year ranging from 27 percent to 51 percent, said investors, who asked not to be identified because the returns aren’t public. The average stock hedge fund rose 10.7 percent last year, according to Chicago-based Hedge Fund Research Inc.
“Across the board the Tiger Cubs were some of the best- performing funds last year because they’ve been able to provide two-sided alpha,” or gains on both rising and falling stocks, said Ted Wong, chief investment officer at Constellar Capital LLC in New York, which farms out money to hedge funds.
Market volatility, as measured by the Chicago Board Options Exchange SPX Volatility Index, almost doubled last year to the highest since early 2003. The price swings provided investors with more opportunities to profit from stocks they owned as well as those that they shorted, or bet would decline.
Robertson, 75, one of the most successful hedge-fund managers, returned an average of 25 percent over two decades. He gave back client capital in 2000 after 18 months of losses and redemptions caused assets to drop to $6 billion in March 2000 from $22 billion in August 1998.
$25 Billion
Robertson has since seeded about 30 fund managers, including Coleman and Hwang, who oversee a combined $25 billion. The group generated an average return of 55 percent before fees last year.
The Tiger Cubs are mostly stock-pickers in Robertson’s mold, relying on research to identify companies they deem inexpensive based on financial yardsticks such as earnings growth, and to bet against stocks they think are poised to fall. They pay special attention to the quality of a company’s management.
(H/T: The Big Picture)
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