| Feroz Dewan (Bloomberg) |
It could be the most highly anticipated new launch that never actually happens.
When Feroz Dewan left Tiger Global Management on June 30, 2015, many people in the hedge fund world thought he would eventually resurface to run his own firm. Given Dewan’s huge success as portfolio manager of Tiger Global’s long-short equity hedge funds and long-only equity fund, a Dewan fundraising could have easily amounted to billions of dollars and even broken a record, or close to it, the thinking went.
But times have changed since then. At least two individuals involved in the industry tell me Dewan is sitting on the fence and still has not decided whether he wants to simply run a family office or seek outside investors.
That he is even considering not raising money from outsiders underscores how difficult it has become lately for hedge fund managers just to hang on to their investors, let alone maintain their fee structure. It’s not hard to see why: Over the past few years, many hedge fund investors have grown frustrated with the returns they are receiving from the funds in which they have invested.
This year alone several luminaries are losing large sums, including Dewan’s old boss, Tiger Cub Chase Coleman, whose long-short equity funds have lost 17.7 percent for the year through August.
As a result, several of the industry’s best-known hedge fund firms have suffered sizable redemptions, including New York–based York Capital Management; Greenwich, Connecticut–based Tudor Investment Corp.; New York–based Omega Advisors (which had already faced hefty redemptions even before the Securities and Exchange Commission charged the firm and its founder, Leon Cooperman, with insider trading and other securities violations last week); New York–based Och-Ziff Capital Management Group; and St. Helier, UK–based Brevan Howard Capital Management. In response, a few of these firms have cut their fees in hopes of stemming the asset decline. And at least one formerly high-flying manager has given up: On Monday, 28-year hedge fund veteran Richard Perry announced that he will be shutting down his flagship hedge fund, Perry Capital.
Dewan joined Tiger Global in 2003. At the time of his departure from the firm, he was a partner with day-to-day oversight of the Tiger Global Investments long-short funds and the Tiger Global Long Opportunities fund. Before joining Tiger Global, Dewan, who grew up in the Philippines and attended high school in Singapore, spent a year at Silver Lake Partners, a technology-oriented private equity firm, and about two years at consulting firm McKinsey & Co.
Dewan is widely credited with Tiger Global’s recent success and the successful launch of its long-only fund, which compounded at nearly 17 percent from the time of the fund’s inception in October 2013 through June 2015.
Meanwhile, in each of his last four full years at Tiger Global, the long-short funds posted double-digit gains, including 45 percent in 2011 and 21 percent in 2012.
However, Tiger Global has been having a rough time since Dewan left 14 months ago. Tiger Global LP had gained 5.7 percent in the first half of 2015, when Dewan was still around, but wound up finishing the year up just 6.9 percent, gaining a little more than 1 percent in the first six months after Dewan’s departure. This year the fund is still down nearly 18 percent, after losing 22.1 percent in the first quarter.
Certainly, investors are interested in participating in Dewan’s next act. When one investor in Tiger Global was asked whether he would invest with Dewan, he said he would definitely consider it, but he would have to do full due diligence first.
However, Dewan may ultimately conclude it is not worth dealing with investors and all of the related issues. Watch this space.
