| Andreas Halvorsen, Viking Global Investors (Bloomberg) |
It was a pretty good year for several managers with roots in Julian Robertson Jr.’s legendary hedge fund firm, Tiger Management Corp.
Of this elite group, however, one manager stood out. David Gallo’s Valinor Management posted a 20.6 percent net gain last year, making Gallo perhaps the best-performing of all the Tiger-affiliated managers last year.
New York-based Valinor, which manages $3.7 billion, was also one of the best performers among all hedge funds in 2014. Gallo can be called a great-grandcub as well as a Tiger Cub. He previously worked at New York-based Bridger Management, founded by Roberto Mignone, who in turn previously worked for Tiger Cub John Griffin’s New York-based Blue Ridge Capital. Gallo also previously worked at Tiger Management.
Two stocks that were consistently among Gallo’s two or three largest holdings last year, depending on the quarter, performed especially well. For example, shares of FleetCor Technologies, which provides various kinds of payment cards for businesses, surged about 27 percent last year, while Cheniere Energy, an company that hopes to liquefy and export natural gas from Sabine Pass, Louisiana, jumped 58 percent. Valinor also enjoyed big gains from a private investment made in LendingClub, which went public in December.
Viking Global Investors’ long-short hedge fund Viking Global Equities returned 2.3 percent in the fourth quarter, pushing up its performance for the year to 13.4 percent. This was more or less in line with the S&P 500.
The Greenwich, Connecticut-based firm’s Viking Long Fund rose 17.2 percent last year after surging 4.2 percent in the fourth quarter, beating the benchmark, which was up 13.7 percent last year, including dividends reinvested.
We earlier reported that at the end of the third quarter, Viking disclosed a significant position in Alibaba Group Holding, the Chinese e-commerce giant. The stock rose nearly 6 percent in the fourth quarter. Viking was founded by Tiger Cub and Norwegian native O. Andreas Halvorsen.
Meanwhile, we reported earlier this week that New York-based Tiger Global Management’s hedge funds, headed by Feroz Dewan, were up 17.1 percent last year. It is not known how Tiger Global’s long-only fund fared. Tiger Global was founded by Tiger Cub Charles (Chase) Coleman III.
Other Tiger Cubs and related managers underperformed the market. For example, Jonathan Auerbach’s New York-based Hound Partners gained 2.6 percent in the fourth quarter, pushing its gain for the year up to 9.1 percent, according to an investor.
Most of Hound’s gains came in the second half of the year. We earlier reported that it was up less than 1 percent at the end of June, even though the long portfolio was up 8.14 percent on a gross basis at the time.
The Tiger Seed — so-called because Auerbach received start-up investment capital from Robertson — generally maintains a low net exposure. In April the firm lowered its portfolio’s gross exposure from 157 percent to 151 percent but raised its net exposure to 34 percent from just 23 percent the previous month. It maintained this net exposure at 33 percent in May, according to monthly reports obtained earlier by Alpha.
Lee Ainslie’s Maverick Fund, managed by Dallas-based Maverick Capital, jumped 5.5 percent in the third quarter. As a result, the Tiger Cub finished the year up 8.5 percent.
The hedge funds managed by Christopher Hansen’s San Francisco-based Valiant Capital Management lost 3.29 percent in December. As a result, they finished the year up between 7 percent and 8 percent. In December, Valiant’s extensive side pocket portfolio containing a number of private investments gained 5.72 percent. However, the liquid portfolio lost 5.44 percent. This was a reverse of November, when the liquid portfolio way outperformed the side pockets.
Meanwhile, Stephen Mandel Jr.’s Lone Pine Capital posted gains of just 1 percent to 5 percent in its hedge funds and long-only funds, according to an investor. As a result, Mandel’s long portfolio wound up lagging the overall market for only the second time in the 17 years since Mandel established his Greenwich, Connecticut-based hedge fund firm.
As a result, Mandel did not return capital to investors, since he is said to prefer the funds to be up at least 10 percent before doing so. Mandel returns capital to keep his funds at an optimal size.
Meanwhile, London-based Tosca Opportunity, headed by Martin Hughes and managed by Toscafund Asset Management, rose just 1 percent in 2014. However, Hughes played defense last year, concentrating on protecting the large gains the fund made in the previous two years. For example, it surged 56 percent in 2013 and has compounded at 28 percent over the past three years despite last year’s small gain.
Last year, Tosca Opportunity benefited from two successful public-to-private offers. In the bigger deal of the two, Daisy Group, a telecom service company for midsize companies, went public in a deal valued at about $1 billion. Tosca Opportunity owned 28.5 percent of the company.
And then, of course, there are Robert Citrone’s two macro funds, whose losses we chronicled all year. The Discovery Global Opportunity Fund gained 2.28 percent in December, trimming its loss for the year to 3.21 percent, according to an e-mail sent from Citrone to investors. Through December 26, the Discovery Global Macro Fund was down 8.54 percent for the year, according to a document from investment bank HSBC that tracks hedge fund performance. They are managed by his South Norwalk, Connecticut-based firm Discovery Capital Management.
Citrone told investors that December gains in the Opportunity fund were led by positions in currencies and equities, while fixed income detracted from returns. “Our structural shorts in Russia and South Africa (both of which are expressed through currency, equities, and fixed income) were two of the larger drivers for the month, as continued weakness in the price of oil weighed on Russia specifically, and EM more broadly,” Citrone added. Equities performed best in Russia, China, the US, South Africa, Argentina, and developed Europe, he stated in the e-mail. “Security selection was a positive factor for the month, with most of the gains coming from the short side,” he elaborated.
