It is no secret by now that last year was a particularly rough one for hedge fund managers who once worked for Julian Robertson Jr.’s Tiger Management. It was also tough for those who were seeded by his firm or even worked for someone who once worked for him.
We earlier noted that most of the biggest Tiger-related firms lost money last year, especially the long-short managers. And the smaller, lesser-known ones did not fare any better.
However, one prominent Tiger descendant, Coatue Management, made money. The firm, which goes long and short stocks, ran $9.7 billion at the beginning of 2016. It’s headed by Philippe Laffont, Coatue’s founder and former Tiger Management analyst.
Last year its Coatue fund was up 1.85 percent even after posting a loss in the fourth quarter thanks to a very rough November.
Although this is not exactly a performance to brag about, it stands out merely for being profitable within a group that mostly suffered losses.
Coatue’s gains came after the fund posted double-digit returns in three of the four previous years.
Coatue did not respond to requests for comment.
However, its recently filed 13F document, which highlights December 2016 quarter-end stock holdings, helps to offer an interesting clue to what worked and what didn’t last year.
One interesting takeaway is that — like many of the Tiger crowd — Coatue owned many high-profile technology and Internet stocks. However, the ones it owned worked out a lot better than they did for some of the losing funds.
This was partly due to stock selection, as well as when Coatue got in and out of the specific stocks. We also don’t know how Coatue’s short book fared, which no doubt played a role in its performance.
In any case, the hedge fund heavily benefited from a number of new, major positions established during 2016.
For example, in the third quarter it made a small investment in Nvidia Corp. and then more than doubled the position in the fourth quarter, making Nvidia the firm’s third-largest U.S. long. Sure enough, shares of the company, which makes graphics architecture for the gaming industry, surged nearly 140 percent in the second half of last year.
Coatue also neatly timed its reentry into Apple in the third quarter, when the iPhone and iPad maker instantly became its second-largest holding. Although we don’t know exactly when Coatue started buying the stock or what price it paid, we do know the stock rose 21 percent in the second half of the year.
The hedge fund firm also heavily benefited from the big bet it placed on Liberty Broadband Corp. in the second quarter, when the stock became Coatue’s second-largest U.S. long. The stock surged more than 27 percent from the end of March through year-end.
Shares of Alibaba Group Holding were the sixth-largest long after Coatue got back into the stock in the third quarter. In the second half of the year, the Chinese e-commerce company rose more than 10 percent.
Meanwhile, Facebook, a longer-term holding and Coatue’s largest U.S. long for most of last year, also rose 10 percent in 2016.
