| Lee Ainslie III, Maverick Capital (Bloomberg) |
Tiger is clearly ruling the hedge fund jungle, especially the long-short landscape.
While many of the best-known hedge fund managers posted sizable losses in 2015, many hedge funds with roots in Julian Robertson Jr.’s Tiger Management are emerging as some of the best performers in 2015. The only other group that rivals them is a select number of multistrategy hedge fund managers.
The Tiger-affiliated managers excelled last year for several reasons. They are generally good stock pickers, and many of them had the right Internet stocks, which surged in value. These managers also did a great job of short-selling, something they are known for as a group — and something that other long-short managers haven’t done as well lately and that the activist managers don’t really do at all.
In many cases, the Tiger-related funds built very strong gains earlier in the year and were able to minimize losses and protect some of the gains since the summer’s stock market sell-off and subsequent volatility.
Perhaps the most successful and consistent Tiger Cub all year was Lee Ainslie III’s Dallas firm, Maverick Capital.
The Tiger Cub’s long-short fund, Maverick Fund, finished the year up 16.5 percent. Maverick Levered — which, as the name implies, uses borrowed money to juice up performance — returned 26.7 percent last year.
The firm’s Maverick Long fund gained 6.6 percent for the year by comparison. This was 10 percentage points worse than the long-short fund, clearly suggesting that Maverick did very well with its short bets. The firm has also done a good job in recent years integrating its quantitative strategy with its stock-picking.
On the long side, Maverick clearly benefited from two major Internet and tech holdings: Alphabet, formerly known as Google, which surged nearly 45 percent last year, and Priceline Group, up about 12 percent. It also did well with telecommunications equipment maker CommScope Holding Co., which rose 13 percent.
The story at Tiger Cub Stephen Mandel Jr.’s Lone Pine Capital is somewhat similar.
The Greenwich, Connecticut–based manager’s long-short funds returned on average about 11 percent last year. However, the firm’s long-only fund was down 1 percent for the year. Again, this suggests the short bets were the star of the show.
In Lone Pine’s case, the firm was hurt badly by a handful of long holdings that got hammered, including Valeant Pharmaceuticals International and Illumina, maker of DNA-sequencing equipment.
Tiger Cub Andreas Halvorsen’s Viking Global Investors also posted strong gains in its three main funds last year. Viking Global Equities, the firm’s long-short equity fund, added 4 percent in the fourth quarter, putting it up 8.3 percent for the year.
Short picks were also among the heroes at the Greenwich, Connecticut firm. After all, while its Viking Long Fund returned 5.7 percent in the fourth quarter, better than the firm’s hedge fund over the same period, the portfolio was up 4.5 percent for the full year.
We earlier pointed out that VGE’s long holdings lost 6 percent in August and again in September, during the market’s sell-off and overall volatility. During August and September, Viking posted strong gains for its short portfolio, while it suffered big losses from its longs, according to the firm’s third-quarter letter.
On the other hand, Viking Global Opportunities, the firm’s hybrid fund that opened at the beginning of 2015, rose 3.8 percent in the fourth quarter and finished its first year of operation up an impressive 15.3 percent.
Meanwhile, the hedge funds managed by New York–based Tiger Global Management, founded by Tiger Cub Chase Coleman, gained roughly 7 percent in 2015.
And we earlier reported that Toscafund Asset Management’s offerings did very well last year too. The Tosca fund, a long-short fund headed by Johnny de la Hey, returned 14.7 percent in 2015. Tosca Opportunity fund, an activist fund headed by Tiger Cub Martin Hughes, the founder of the London firm, gained 8.5 percent in 2015.
Among the smaller, so-called Tiger Seeds (because they received seed capital from Robertson), New York–based Bloom Tree Partners finished the year up 5.76 percent, despite losing more than 1 percent in December. It was up more than 11 percent through July. Founder Alok Agrawal has historically averaged a 152.7 percent gross exposure since his firm’s May 2008 inception but a net exposure averaging just 16.8 percent.
Through June 2015 the firm’s main fund outperformed the Standard & Poor’s 500 stock index in 27 out of 32 S&P 500 down months, with an average outperformance of 5.52 percent per month. What’s more, Bloom Tree has outperformed the S&P 500 in 11 of the 12 down market months during the two most recent financial crises — the global near-depression of 2008 and the 2011 European financial crisis.
Greenwich, Connecticut–based Glade Brook Capital Partners, which last year shrank and refocused its hedge fund to a more concentrated portfolio, finished the year up 13.12 percent. It is running only about $300 million these days in its long-short fund.
