| Andreas Halvorsen, Viking Global Investors (Bloomberg) |
Several high-profile Tiger Management progeny had a rough time in June. As a result, they extended their losses for the year. In several cases, the first-half losses are so steep that it will be a major challenge for these hedge fund firms to break even by the end of the year.
For example, the long-short funds of Chase Coleman’s New York–based Tiger Global Management dropped another 2.7 percent last month. They are now off by 20 percent for the year, even though the quarter was profitable.
These long-short funds — Tiger Global and its offshore counterpart — lost 22 percent in the first quarter, with virtually all of the losses coming in the first two months.
Don’t totally write off Coleman and his team, headed by Scott Shleifer, however. They have dug giant holes for themselves in the past only to stage late-year rallies.
Tiger Global runs a very concentrated book of technology and Internet names. So it is not inconceivable that the forces that pushed down its portfolio could lift it as well.
We did report earlier that the firm reduced risk in the first quarter. Tiger Global Management slashed its gross exposure to 134.2 percent from about 199 percent just three months earlier and reduced its net exposure to just 5 percent from 40 percent at year-end.
At the end of the first quarter, its three largest positions were in the streaming video company Netflix, Chinese Internet company JD.com and the online travel company Priceline Group.
Shares of Netflix were down nearly 11 percent last month alone, contributing heavily to June’s loss. They are off a little more than 11 percent for the year.
JD.com fell nearly 14 percent last month and is off 34 percent for the first half.
Priceline was off 1.2 percent or so last month and 2 percent for the year.
Another Tiger descendant that continues to struggle is Jonathan Auerbach’s Hound Partners, the New York–based Tiger Seed. Hound fell another 3.8 percent last month and is now off by 15.8 percent for the year.
As we have previously reported, the hedge fund firm has been trimming its net exposure for the past few months.
It didn’t help that in the first quarter Hound raised its stake in Valeant Pharmaceuticals International. The stock was down 29 percent in June alone and 80 percent for the first half. Ouch!
Meanwhile, Spirit AeroSystems, Hound’s largest individual U.S. long, was off 8 percent last month. Shares of the maker of large commercial aircraft structures are now down about 15 percent for the year.
Another high-profile fund managed by a Tiger Cub that lost money last month was Viking Global Equities, down more than 2 percent.
However, if you take a longer view, Viking could be coming back. The long-short hedge fund managed by O. Andreas Halvorsen’s Greenwich, Connecticut–based Viking Global Investors was up 3.2 percent in the second quarter, cutting its loss for the year to 5.9 percent.
Viking’s long fund was up 4.2 percent in the second quarter, cutting its loss for the year to 3.7 percent. And Viking Global Opportunities, the firm’s hybrid fund, was up 1.5 percent in the second quarter, trimming its loss for the year to 5.3 percent.
So, Viking’s three funds are within striking distance of break-even heading into the second half of the year.
Alphabet, with its two classes of shares, was Viking’s largest long position at the end of the first quarter. However, both stocks of Google’s parent fell between 7 percent and 8 percent in the second quarter.
Viking’s second-largest long, Facebook, was flat for the quarter, but Amazon.com, its No. 3 stock, surged 20 percent for the period.
At least two of Lee Ainslie III’s main funds lost money in June. However, they are in better shape heading into the second half since they are not too far from break-even.
For example, Maverick Fund, the main long-short offering of Dallas-based Maverick Capital, lost 1 percent in June but gained 3 percent for the quarter. So it is down only 0.8 percent for the year.
Maverick’s long fund lost 1.8 percent in June but still managed to post a 1.5 percent gain for the quarter. So it is off by only 0.2 percent for the year.
Among smaller firms, Richard Gerson’s New York–based Falcon Edge Capital was flat last month. However, this means that its main fund — Falcon Edge Global Funds — remains down about 12 percent for the year.
Two smaller funds, however, are in the black — or rather, not in the red — for the year.
Tosca Opportunity, headed by Martin Hughes and managed out of London-based Toscafund Asset Management, lost 80 basis points in June. However, the firm is still up 6.5 percent for the year.
And Tybourne Equity Master Fund, managed by Hong Kong–based Tybourne Capital Management, was up 2.5 percent last month and is now flat for the year. Tybourne’s manager is Viswanathan (Eashwar) Krishnan, who is considered a Tiger Grandcub because he was previously a senior analyst at Stephen Mandel Jr.’s Greenwich, Connecticut–based Lone Pine Capital for 11 years.
