| Andreas Halvorsen, Viking Global Investors (Bloomberg) |
More funds are reporting negative February performance numbers by the day. And some of the worst performers are the funds with roots in Julian Robertson Jr.’s Tiger Management.
Several of the largest of the so-called Tiger Cubs, Seeds, and Grandcubs, most of whom run long-short equity funds, suffered sharp losses last month and have posted big declines for the first two months of the year. Part of the problem is that many of the Internet, media and technology stocks these managers tend to favor have been hit hard so far this year. In addition, stocks of companies the managers are shorting are surging in price, and the rise is being exacerbated by investors covering their short positions. Several funds have been hurt because they stuck with big positions in controversial drug giant Valeant Pharmaceuticals International, which fell about 35 percent over the first two months of the year.
Perhaps the worst performers among this elite group are the hedge funds managed by Chase Coleman’s New York–based Tiger Global Management. These funds posted a loss of 8 percent last month. This brings the Tiger Seed’s loss for the first two months of the year to between 21 percent and 22 percent.
At the end of 2015, Tiger Global’s top ten long positions accounted for 93.1 percent of equity for the long-short funds. They were led by the Big Three — Amazon.com, Netflix and JD.com — which account for a disproportionately large share of the funds’ assets.
However, while these stocks are down sharply for the year so far, they do not appear to be behind the big decline in February, having suffered most of their losses in January. For example, Amazon.com was down about 6 percent in February, but it is down 18 percent over the first two months. Netflix fell a little less than 2 percent in February but was down 18 percent for the first two months. JD.com declined just a little more than 1 percent last month but is down 20 percent for the year. Priceline.com, Tiger Global’s fifth-largest holding, surged nearly 19 percent last month.
Meanwhile, Jonathan Auerbach’s New York–based Hound Partners was down 4 percent in February and is now down 10.6 percent for the year. It was hurt badly by Valeant, its second-largest U.S. long position entering the New Year. Spirit AeroSystems, the maker of large commercial aircraft structures and Hound’s largest long position at year-end, fell 8 percent in the first two months of 2016. FleetCor Technologies, Hound’s third-largest holding, is down about 11 percent for the year.
Viking Global Equities, the main hedge fund managed by Greenwich, Connecticut–based Viking Global Investors, lost 7.1 percent in February. It is down 9.7 percent for the year. The firm’s Viking Long Fund fell 5 percent in February and is down 12.2 percent year-to-date. The firm, which has a pretty large exposure to drug companies and other health care companies, was partially hurt by Valeant, which was no longer among its top ten long holdings as of the end of 2015.
Drug giant Allergan, Viking’s third-largest long position, was profitable in February but is down 7 percent for the year, while Teva Pharmaceutical Industries is down more than 14 percent this year through the first two months. Viking was also hurt by its Internet bets. For example, Google, its largest holding at year-end, lost 6 percent in February and is down 8 percent for the year.
The long-short funds managed by Stephen Mandel Jr.’s Lone Pine Capital fell between 2 percent and 3 percent in February and are now down 9 percent for the year. The firm’s largest long holdings were Amazon.com, Microsoft and Priceline.com.
Amazon.com fell 18 percent for the first two months. Priceline.com surged 19 percent last month but is down less than 1 percent for the year. Microsoft is down nearly 8 percent for the first two months. Lone Pine was also said to be hurt somewhat by its short bets.
Among smaller Tiger-related funds, Paul Hudson’s Greenwich, Connecticut–based Glade Brook Capital Partners posted a 7.7 percent decline in its Glade Brook Global Offshore Fund last month. As a result, the fund, which has a little more than $300 million, is now down nearly 11 percent for the year.
There are a few bright spots among this crowd, however. Lee Ainslie III’s Maverick Fund, managed by his Dallas-based Maverick Capital, lost less than 1 percent in February and is down less than 3 percent for the year. It seems to be doing a good job with its short book and staving off the carnage among its long holdings.
Sure, its largest long, Liberty Global, is down nearly 12 percent for the year. However, Aramark, its second-largest long position, was off by only a little more than 2 percent, while No. 3 holding Sabre Corp. was down less than 3 percent.
Tosca Opportunity, headed by Martin Hughes and managed by London-based Toscafund Asset Management, is actually profitable this year, up 3 percent for the first two months.
