Tiger Global Management’s hedge funds suffered a setback in December, dropping 3.1 percent for the month, but still posted full-year gains that rank among the best performances of 2014.
Tiger Global’s hedge fund performance last year further enhances the reputation of the firm’s founder, Charles (Chase) Coleman III, and Feroz Dewan, who manages the hedge funds, as they continue to solidify their elite stature among the newer generation of hedge fund managers. It also marks a turnaround from earlier in the year. We had reported that the Tiger Global hedge funds were up only about 0.5 percent through April. They finished the year up 17.1, much better than the 13.7 percent gain for the S&P 500 (including reinvested dividends) and way better than the bulk of hedge funds, which look like they came in well below the benchmark.
It is hard to figure what accounted for the loss last month. For one thing, private equity accounted for 10.9 percent of equity investments in the firm’s three hedge funds — Tiger Global, its offshore counterpart and Tiger Global II — at the end of the third quarter. It is not known how this portfolio fared in December.
Tiger Global also could have been hurt by its short positions, which are not publicly disclosed. In 2013, for example, Tiger Global returned 14.3 percent, even though its long portfolio had surged 56 percent. This was because the firm’s short positions had risen 51 percent, according to its 2013 year-end letter.
We also pointed out earlier that in a third-quarter commentary dated October 31, Tiger Global told clients that “in recent weeks” it had added to positions that had “increased in attractiveness,” especially among long positions. At the same time, it replaced positions “that have performed better and have relatively less compelling return prospects.” So we also don’t know what specific changes took place.
That said, several of Tiger Global’s biggest holdings at the end of the third quarter got hit last month. One of the worst performers was Bitauto Holdings, the Chinese Internet company that specializes in the auto industry. The stock, which plummeted nearly 24 percent in December, was Tiger Global’s largest new position in the third quarter and its third-largest holding.
Chinese e-commerce giant Alibaba Group Holding, another Tiger Global holding, lost nearly 7 percent in December. MasterCard, its second-largest position, fell 1.3 percent. On the other hand, Twenty-First Century Fox, Tiger Global’s largest disclosed long equity position at the end of the third quarter, rose 4.3 percent last month.
As of the end of September, Tiger Global had $6.9 billion in long-short hedge funds and another $1.5 billion in long-only funds. We recently reported that the firm had planned to launch a long-only Internet-only fund, Tiger Global Internet Opportunities, and an offshore counterpart on January 1, with a total target size of $1 billion to $1.5 billion. It also planned to reopen Tiger Global Long Opportunities, with the hope of raising $500 million to $1 billion of new capital.
The firm also manages $7.5 billion on the venture capital side. That division is run by Scott Shleifer, who started the business, and Lee Fixel.
