A high-profile hedge fund firm that got its start thanks to an investment from Tiger Management founder Julian Robertson Jr. is facing big declines for a second straight year.
The Tiger Ratan Capital Fund, the volatile long-short fund managed by Nehal Chopra’s New York–based Ratan Capital Management, is down more than 16 percent this year through August. That follows a 19 percent loss in 2015. Tiger Ratan was down nearly 21 percent through July 2016, though it was able to rally last month, posting a 4.6 percent gain in August.
Even so, assets continue to decline at the firm, a so-called Tiger Seed because of its influential backer. Tiger Ratan currently manages well under $1 billion, although the exact figure could not be learned by the time this story was published. However, just a year ago it was managing about $1.4 billion. The firm declined to comment.
Chopra, a Mumbai native, founded Tiger Ratan in 2009 with $25 million in seed capital from Robertson. She is the only well-known member of the extensive web of Tiger descendants who is a woman. But at the time she met Robertson, Chopra possessed the traits typical of managers in his orbit: athletic, highly competitive and overachieving. At one time a top-ranked teenage tennis player in India, Chopra earned an undergraduate degree and an MBA from the Wharton School of the University of Pennsylvania by age 21. Before she started Tiger Ratan, she worked at hedge fund firms Ramius Capital Group and Balyasny Asset Managent following stints in investment banking at UBS and Lehman Brothers Holdings.
Chopra’s performance prior to last year attracted notice, with her flagship fund posting annual gains ranging between 22 percent and 47 percent from 2012 through 2014. Now she is battling back from Tiger Ratan’s worst-ever drawdown, with the fund declining 51.6 percent from May 2015 to June 2016.
It is not known exactly which stocks and trades are most responsible for this year’s losses. Tiger Ratan’s U.S. long portfolio, however, had only about $200 million at the end of the second quarter, down from about $280 million the previous period. One year ago Tiger Ratan reported $1 billion in its U.S. stock portfolio.
Tiger Ratan likes to run a concentrated portfolio, even more so than the typically highly concentrated books run by some Tiger descendants. The $200 million is spread over just seven stocks.
At the end of the second quarter, Tiger Ratan liquidated four positions — drugmakers Valeant Pharmaceuticals International and Allergan, broadcasting giant Comcast and Chinese travel portal Ctrip.com International. Valeant and Allergan had been a major reason for Tiger Ratan’s earlier losses. The two stocks alone accounted for 35 percent of assets at the end of June 2015, just before the two stocks, especially Valeant, went into their respective tailspins. Valeant fell 75 percent in the first quarter of this year alone, while Allergan dropped 13 percent.
On the other hand, Tiger Ratan is reaping big benefits from its two largest holdings as of the end of the second quarter of this year, which combined accounted for about 46 percent of its assets, roughly the same share as the first quarter.
Cable and broadband giant Charter Communications was the portfolio’s largest position, accounting for roughly one quarter of the U.S. equity assets and nearly 22 percent the previous quarter. The stock returned about 40 percent in the first eight months of the year.
Packaged foods giant Post Holdings, Tiger Ratan’s second-largest position, is up about 35 percent this year.
On the other hand, cable television network Starz — the third-largest position at about 19 percent of assets after Ratan heavily boosted its stake in the second quarter — is losing money. But it is not the disaster the two drugmakers have been for Tiger Ratan’s portfolio. Shares of Starz are down nearly 2 percent since the end of June and off about 8 percent for the year.
Perhaps now that Chopra has finally shed her addiction to the two losing drugmakers, she can get back into positive territory over the next few months. This is life in the volatile lane.
