Microsoft Corp. agreed to buy LinkedIn Corp. for $26.2 billion in an all-cash deal, sending shares of the online social networking company surging more than 46 percent on Monday, to close at $192.21.
That’s good news for many of the Tiger crowd, right? After all, a large percentage of the so-called Tiger Cubs, Tiger Seeds and Tiger Grandcubs — those with ties to Julian Robertson Jr.’s Tiger Management — specialize in long-short equity strategies that tend to gravitate to Internet, technology and media companies, such as LinkedIn.
However, it looks like most of these managers — many of which are in losing territory this year — missed this stock, which enjoyed one of the best single-day moves in recent history. As it turns out, just two of nearly 50 firms with roots in Tiger owned shares of LinkedIn at the end of the first quarter. That’s all. And neither of those firms is among the well-known Tiger firms. On the contrary, none of the big names most investors are familiar with held a position in the stock at the end of the first quarter.
The same goes for the rest of the hedge fund world. Very few non-Tiger names are in the stock, and of those, virtually none are the biggest names.
That said, this seemingly missed opportunity may not be one. Even after Monday’s surge, the stock is still down more than 14 percent for the year. This is because the stock nearly halved in February after the company stunned Wall Street when it issued a weak forecast for the rest of the year.
Now, with the merger price locked in at $196 per share, no one who bought the stock at the beginning of the year will wind up making money on it. You had to have bought LinkedIn after the stock nearly halved on February 5 to have made big bucks on Monday.
And if you didn’t buy the stock after it collapsed in February, you had to have bought it at least as far back as last August to have gotten it at a price that would give you a healthy profit at the takeover price.
So who did own the stock at the end of the first quarter? One of the Tiger-affiliated funds was SRS Investment Management, founded by Tiger Global Management alum Karthik Ramakrishna Sarma. SRS was the ninth-largest shareholder, and the stock was SRS’ third-largest U.S. long.
According to a regulatory filing, the firm had a little more than $2.7 billion in U.S. long equity assets at the end of the first quarter. It established the entire position in LinkedIn during the March 2016 period. So it is highly possible it bought the stock after the collapse.
The other Tiger firm with a position in LinkedIn was Waltham, Massachusetts–based Matrix Capital Management, co-founded by David Goel and Paul Ferri. It managed a total of $2.1 billion at year-end.
Goel is a Tiger Cub, since he previously worked as an analyst and partner at Tiger Management. In fact, he attended the same prestigious New Hampshire boarding school, Phillips Exeter Academy, as did Tiger Cub Stephen Mandel Jr., now the head of Lone Pine Capital.
Several non-Tiger hedge funds also had smaller positions in LinkedIn at the end of the first quarter. They include London-based Lansdowne Partners, which counted the stock as its third-largest U.S. long, and New York–based Eminence Capital, whose 17th-largest U.S. long it was. In addition, LinkedIn ranked No. 94 in size in the U.S. long stock portfolio of New York–based D.E. Shaw & Co.
