| Andreas Halvorsen, Viking Global Investors (Bloomberg) |
Several of the hedge fund firms with roots in Julian Robertson Jr.’s Tiger Management continue to chip away at their earlier-year losses, thanks to gains in September.
Still, many of the so-called Tiger Cubs, whose founders worked at Robertson’s firm, and Tiger Seeds, who received start-up capital from Robertson, remain mired in losing territory. Others are back in the black or on the verge of getting there.
Tiger Global Management, founded by Tiger Cub Chase Coleman, had a big September. The firm’s main long-short equity fund, Tiger Global, surged 4.2 percent last month. That capped a strong third quarter, when it returned about 7 percent. Even so, the fund is still down 14.5 percent for the year.
As we reported earlier, the fund cut back its gross and net exposure drastically after it lost about 22 percent in the first two months of the year. In the past year or so, the fund also increased the concentration of its portfolio.
In the June quarter four stocks dominated the firm’s $5 billion U.S. long equity portfolio, which consists of only 20 individual stocks. In descending size order they are Amazon.com, Charter Communications, the Priceline Group, and JD.com. In September alone, Amazon.com surged nearly 9 percent, Charter rose 5 percent, Priceline rose nearly 4 percent, while JD.com rose nearly 3 percent.
Tiger Seed Jonathan Auerbach’s Hound Partners Offshore Fund, managed by Hound Partners, also enjoyed a pretty good September, gaining 2.3 percent. Yet it remains off by 9.9 percent for the year. However, this is still better than three months ago, when the hedge fund was down close to 16 percent.
Hound got a big benefit from its stake in Chinese web search firm Baidu, its fourth-largest U.S. long. Baidu jumped 6.4 percent last month after climbing more than 7 percent the previous month. It fell 16 percent in the first seven months of the year, however. Refiner and marketer Tesoro Corp., a refiner and marketer of petroleum products and Hound’s second-largest individual U.S. long position, rose 5.5 percent in September.
On the other hand, hospitality giant Hilton Worldwide Holdings, a new position established in the second quarter that became Hound’s third-largest individual U.S. common stock position, lost nearly 4 percent last month.
Spirit AeroSystems, a maker of large commercial aircraft structures, lost 3 percent. It was Hound’s largest individual stock position at the end of the second quarter.
Tiger Cub Andreas Halvorsen’s Viking Global Investors also continues to battle back from earlier-year losses. But unlike Tiger Global and Hound, Viking’s long-short fund is now on the verge of break-even.
In the third quarter Viking Global Equities rose 5.7 percent. As a result, it is down just 0.5 percent for the year.
Apparently, the fund’s short bets have accounted for a big part of the loss, given that the firm’s Viking Long Fund surged 8.3 percent in the quarter and is now in the black, up 4.4 percent for the year. The firm’s hybrid fund, Viking Global Opportunities, returned 4 percent in the third quarter, cutting its loss for the year to 1.5 percent.
The firm benefited from three of the four so-called FANG stocks — Facebook, Amazon.com, and Alphabet (formerly called Google). In the third quarter Facebook gained about 3.5 percent, Amazon.com surged 17 percent, and the two classes of Alphabet were up 12 percent and 14 percent or so.
The picture at Tiger Cub Lee Ainslie III’s Maverick Capital is mixed. The firm’s main long-short fund, called simply Maverick Fund, lost 6 percent in the third quarter and is now down 7 percent for the year. The short bets are part of the problem. After all, the firm’s Maverick Long fund returned 3 percent for the quarter and is up 3 percent for the year.
However, several of Maverick Fund’s largest long holdings are not exactly doing well either. For example, drugmaker Pfizer, Maverick’s largest U.S. long at the end of the second quarter, was down nearly 4 percent in the September three-month period. Philip Morris International, its second-largest U.S. long, lost 4.4 percent last quarter, while CommScope Holding Co. lost about 3 percent. On the other hand, Sabre Corp., the travel technology company and its third-largest long, gained more than 5 percent in the past quarter.
Meanwhile, several funds are battling to remain in positive territory. Tiger Cub Philippe Laffont’s Coatue Offshore Fund was up about 1 percent for the year through September 16. It is operated by Coatue Management.
And as we earlier reported, Lone Cypress, run by Tiger Cub Stephen Mandel Jr.’s Lone Pine Capital, returned about 1 percent for the year through September 9.
