| O. Andreas Halvorsen, Viking Global Investors (Bloomberg) |
Although most equity markets posted gains in March, many of the high profile long-short equity hedge funds with roots in Julian Robertson Jr.’s Tiger Management posted losses for the month. As a result, they extended their deep losses for the year.
What’s more, even the funds that did make money last month are still down by a sizable amount for the year. Many of these managers — known as Tiger Cubs, Seeds and Grandcubs — are heavily invested in a number of the technology, Internet and media stocks that gained big last year but have fallen this year. In addition, many of these funds have had a difficult time with their short books.
By far the worst performer among this Tiger crowd is New York-based Tiger Global Management. Its hedge funds — Tiger Global, L.P., and Tiger Global, Ltd. — declined by about 40 basis points in March and are now down 21 percent for the year.
As we reported earlier, the New York firm’s top-ten long positions at year-end accounted for 93.1 percent of equity for its long-short funds. The top-three holdings — Amazon.com, Netflix and JD.com — accounted for a huge chunk of those assets. Amazon.com fell about 12 percent in the first quarter, Netflix was off 10 percent, and JD.com lost nearly 18 percent.
Jonathan Auerbach’s New York–based Hound Partners fell 1.9 percent in March, extending its loss for the year to 12.3 percent. Hound was no doubt hurt by its decision to stick with its large stake in Valeant Pharmaceuticals International. That company’s stock plunged 75 percent in the first quarter alone, although it has surged in the first few days of April.
Lone Pine Capital’s funds were said to have made money in March. Even so, the Greenwich, Connecticut, firm founded by Stephen Mandel Jr. continues to struggle for the year.
Its long-short funds are down between 7 percent and 8 percent for the year, while Lone Cascade, the firm’s long-only fund, lost 5 percent in the first quarter. The disparity of the performance suggests that Lone Pine lost more money on its short positions than it made on its longs.
The same is apparently true at Dallas-based Maverick Capital, headed by Lee Ainslie III. For example, Maverick Fund, the firm’s long-short offering, fell 0.58 percent in March and was down about 3.5 percent for the quarter. Maverick Long, on the other hand, gained 6.6 percent in March. As a result, it was down only 1.49 percent for the quarter.
All three of Greenwich, Connecticut-based Viking Global Investors’ funds rebounded last month. But they also are still solidly negative for the year. For example, Viking Global Equities, the firm’s long-short fund, added 1.2 percent in March but is still down 8.8 percent for the year. Viking Long Fund surged 5.4 percent last month, but is still off 7.6 percent for the quarter. The performance of these two funds suggests that VGE had trouble with its short positions last month. Meanwhile, Viking Global Opportunities, the firm’s new hybrid fund, returned 1.3 percent in March but is still down 6.7 percent for the quarter.
Several smaller, lesser-known firms with connections to Tiger are also experiencing a rough year.
For example, New York–based Falcon Edge Capital, founded by Richard Gerson, lost 2.2 percent last month and was down 14.6 percent for the quarter. Bloom Tree Partners, the Tiger Seed founded by Alok Agrawal, posted a slight loss in March but is now down more than 11 percent for the year.
This is somewhat surprising. We had earlier reported that Agrawal has historically averaged a 152.7 percent gross exposure but a low 16.8 percent net exposure; with a beta close to zero, his fund takes virtually no market risk.
Woodson Capital Partners, another Tiger Seed founded in 2010 by James Davis, gained about 1.7 percent last month, cutting its loss for the year to 4.45 percent.
