Nehal Chopra’s Tiger Ratan Capital Fund posted strong gains in the third quarter after heavily revamping its portfolio during that three-month period.
The New York–based Tiger Seed, which likes to run a very concentrated portfolio, generated a roughly 8 percent gain in August and September alone, cutting its loss for the year to 12 percent.
One major reason for the turnaround: Eight of the 11 U.S. longs owned by Chopra’s firm, Ratan Capital Management, were established in the third quarter, including its biggest position and two of its three largest.
Ratan Capital’s U.S. stock portfolio has dramatically shrunk, probably reflecting huge redemptions at the firm. It managed about $135 million in U.S. stocks at the end of September, down from $200 million the previous quarter and more than $1 billion in June 2015, when Ratan was managing a total of $1.4 billion.
Investors are apparently unhappy that Tiger Ratan was down nearly 21 percent in the first seven months of the year after losing 19 percent in 2015. The fund also suffered a 51.59 percent drawdown from May 2015 through June 2016. (Alpha can’t confirm Tiger Ratan’s July 2016 performance, but documents suggest it was profitable.)
Mumbai native Chopra founded Ratan Capital in 2009 with $25 million in seed capital from Tiger Management Corp. icon Julian Robertson Jr. She is the best-known female member of the extensive web of Tiger descendants. Before launching Ratan, Chopra worked at hedge fund firms Ramius Capital Group and Balyasny Asset Management following stints in investment banking at UBS and Lehman Brothers Holdings.
At the end of the second quarter, Tiger Ratan liquidated four positions, including drugmakers Valeant Pharmaceuticals International and Allergan, which were major reasons for the fund’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 tailspins. Valeant fell 75 percent in the first quarter of this year alone, while Allergan dropped 13 percent.
In the third quarter Ratan liquidated four positions again, including two major holdings: Starz, the cable television network that was the firm’s third-largest position, and bottler Coca-Cola European Partners.
On the other hand, Ratan took a new, large stake in Liberty Media Corp., the media giant partly controlled by cable mogul John Malone. Liberty is now Ratan’s largest U.S. long, accounting for nearly 22 percent of the firm’s assets. Sure enough, the stock surged nearly 50 percent in the third quarter and is up nearly 70 percent since the beginning of July. It closed at $32.76 on November 17.
Symantec Corp., Ratan’s third-largest new position and its fifth-biggest overall, rose 22 percent in the third quarter. The cybersecurity stock, which closed at $23.83 yesterday, accounted for more than 10 percent of the hedge fund firm’s assets at the end of the third quarter.
On the other hand, ConAgra Foods, Ratan’s No. 2 new position and third-largest overall, fell just under 2 percent in the second quarter. At the end of September, the food conglomerate comprised 12.6 percent of Ratan’s U.S. assets. On November 17, ConAgra was trading at $36.52.
Packaged foods giant Post Holdings, which remained Ratan’s second-largest position, fell 6.6 percent in the third quarter. Its stock closed at $74.75 yesterday.
Cable and broadband giant Charter Communications, Ratan’s No. 4 position — it was the largest in June — rose more than 18 percent last quarter. Up 44 percent for the year, it closed at $265.48 on November 17.
Altogether, the firm’s five top positions account for 70 percent of its assets.
Ratan investors and Chopra are hoping this newly revamped portfolio will continue to reverse their losses and regain wider investor confidence.
