The first quarter was very rough on most of the so-called Tiger Cubs, Tiger Seeds and other managers with ties to Julian Robertson Jr.’s Tiger Management.
Many of these managers operate long-short funds with a heavy concentration in the highly volatile Internet, technology, telecommunications, media and consumer stocks.
However, one Tiger Cub fared very well in the first three months of the year. Tosca Opportunity, led by Martin Hughes, gained 7.6 percent for the period, making it perhaps the best-performing Tiger-related hedge fund of the past few years. Tosca Opportunity also rose 8.5 percent in 2015. In 2014 it returned just 1 percent, but that was a pause after surging 56 percent the previous year.
Hughes founded London-based Toscafund Asset Management in 2000. Earlier he served as chairman of Tiger Management Europe.
The Tosca Master Fund, a separate long-short fund headed by Johnny de la Hey, lost 13 percent in the first quarter after gaining 14.7 percent in 2015. De la Hey has been with Toscafund since its inception and worked at Tiger Management from 1997 to 2000. Altogether, Tosca Opportunity manages about $1 billion, while the firm runs a total of $4.2 billion.
Tosca Opportunity differs from the bulk of the Tiger Cubs, Seeds and Grandcubs in a variety of ways. For one thing, it is based in London, while most of the Tiger kingdom is scattered around the New York metropolitan area.
And unlike the bulk of the Tiger crowd, which mostly manages long-short funds specializing in so-called TMT stocks (technology, media and telecom), Tosca Opportunity is an activist fund that takes concentrated positions in a handful of stocks.
Two of these activist targets helped to drive results in the first quarter. Home Retail Group, a UK retailer, rose 75 percent. It was the target of a takeover battle, which Hughes encouraged. By the end of the quarter, J Sainsbury, a London-based supermarket giant, finally agreed to acquire Home Retail Group in a deal valued at nearly $1.6 billion.
At one point earlier this year, Hughes was the second-largest shareholder of HRG but cut his position when the deal temporarily fell apart.
Tosca Opportunity also got a big boost from Old Mutual Group, which in the first quarter announced plans to break itself into four different companies on the suggestion of Hughes.
The manager has since sold his positions in HRG and OMG. So he is now sitting on some dry powder, ready to pounce on his next target.
