Are the Tiger Cubs losing their stripes?
Probably not. But last year was a particularly rough one for hedge funds with ties to Julian Robertson Jr.’s Tiger Management Corp. At least eight Tiger-associated managers lost money in 2014, while several others posted low single-digit gains.
Most of the managers who lost money ran long-short funds, while two others managed macro funds.
The most notable among them to post a loss last year was John Griffin’s New York–based Blue Ridge Capital. It is said to have been down in the mid- to upper-single-digit range, according to individuals familiar with the results. The firm now manages $8 billion, down from $9 billion a year ago.
Philippe Laffont’s Coatue Management also lost money last year. The New York firm’s Coatue Offshore Fund lost 2 percent in 2014 after posting double-digit gains in each of the three previous years, including an 18.55 percent return in 2013, according to a document from a firm that tracks hedge fund returns.
It is unclear why Blue Ridge and Coatue lost money. However, we reported earlier this year that a number of well-known Tiger-related funds lost money on their short positions last year. Also, both of these firms — like many other Tiger-affiliated long-short firms — are known for taking concentrated positions in a small number of technology, Internet, media and telecommunications stocks.
Blue Ridge’s five largest holdings at year-end accounted for nearly a quarter of its assets. These were cable giant Charter Communications, drugmaker Actavis, drugstore chain Walgreen Co., sensors and controls supplier Sensata Technologies Holding and online travel giant Priceline Group.
Coatue’s three largest holdings accounted for 25 percent of its assets at year-end: Apple, semiconductor products supplier Avago Technologies and social media giant LinkedIn.
Among smaller firms, New York–based Falcon Edge Capital lost 1.4 percent in its liquid portfolio for the year. It fell 1.6 percent in the fourth quarter alone, as it lost more on its short bets than it gained in its long positions, according to the New York firm’s fourth-quarter letter, obtained by Alpha.
Falcon Edge was founded in mid-2012 by Richard Gerson, a founding executive at Blue Ridge.
Interestingly, at the end of the second quarter, nearly 56 percent of Falcon Edge’s long equity portfolio was invested in securities also held by Blue Ridge, according to data published by New York–based research firm Novus and obtained by Alpha. At the end of the first quarter, about 65 percent of Falcon Edge’s portfolio was invested in securities also held by Blue Ridge. On the other hand, Falcon Edge investors who chose to participate in side pocket investments offered by the firm, in addition to investing in the firm’s liquid portfolio, enjoyed a blended 5.1 percent net gain in 2014, thanks to gains in two side pocket investments — one in China and one in India, according to the firm’s year-end letter.
Meanwhile, hedge funds managed by Greenwich, Connecticut–based Glade Brook Capital Partners also lost money last year. The Glade Brook Global Domestic Fund and the Glade Brook Global Offshore Fund each fell 0.9 percent in the fourth quarter and lost 1.3 percent for all of 2014.
On the other hand, the firm, founded by Paul Hudson, posted gains of between 61.6 percent and 76.7 percent in its three share classes of Glade Brook Private Investors. Hudson is a former managing director at Tiger Cub Chris Shumway’s Shumway Capital Partners.
We also earlier reported that Matthew Iorio’s Greenwich, Connecticut–based White Elm Capital lost nearly 13 percent last year, citing big losing bets on mortgage loan servicer Ocwen Financial Corp. and two toxic affiliated companies, according to its year-end report.
Iorio is known as a Tiger Grandcub because he worked with Tiger Cub Stephen Mandel Jr. of Greenwich, Connecticut–based Lone Pine Capital for six years. Mandel is one of the best-known and most successful Tiger Cubs.
London-based Toscafund, headed by Johnny de la Hey, lost 6.8 percent in 2014. The manager worked at Tiger from 1997 to 2000. The long-short fund is part of Toscafund Asset Management.
Two macro funds with ties to Tiger Management also lost money last year. Tiger Cub David Gerstenhaber’s New York–based Argonaut Global Macro Fund lost about 4.3 percent last year, according to the document tracking hedge fund returns.
And we have previously reported about the losses posted by Tiger Cub Robert Citrone’s South Norwalk, Connecticut–based macro hedge fund firm, Discovery Capital Management. The Discovery Global Opportunity Fund fell 3.21 percent and the Discovery Global Macro Fund lost 8.54 percent for the year, through December 26, the latest figures available.
