Most of his cubs struggled in 2008, but Julian Robertson Jr. again showed the tiger in his DNA. The founder of storied Tiger Management Corp. was up about 150 percent on the year in the account he trades for himself. People familiar with his returns say Robertson began 2008 with about $200 million in assets in that account but astutely played interest rate spreads and currency exchanges to beat all those managers he spawned during Tiger’s heyday.
Some of the most successful managers of recent years came out of Tiger, but many of them were flat or down in 2008 (see “Capsized (But Alive)”).
One of the first well-known names in the hedge fund industry, Robertson, 76, grew famous in the late 1990s when Tiger challenged Soros Fund Management for the mantel of world’s biggest hedge fund firm. At its height Tiger had more than $20 billion in assets but was almost as widely known for its fall as for its rise. Robertson is by nature a value investor, and he did not do well in the dot-com craze. He closed his firm to outside investors in 2000, keeping it as a vehicle for managing his own wealth. Last year, his best ever, Robertson profited off large global macro bets, specifically on U.S. and foreign treasury notes as well as some currency trades. He anticipated the steepening of the U.S. Treasury yield curve, guessing correctly that the spreads between long-term government bonds and shorter-duration Treasury bills would widen (he made a similar trade on Australian securities).
Through a derivative known as a curve steepener, Robertson went short the ten-year U.S. Treasury and long the two-year note, betting that the yield difference between the two would increase. He did it with a fair amount of leverage, according to those familiar with the deal, and he exited around the middle of the year, before the yield curve flattened out. Then he put the trade on again in time to catch the banking crisis that engulfed the country as the year ended.
Ironically, it was big global macro bets that contributed to the demise of Tiger nine years ago. In the years since, however, under the new iteration of the firm, Robertson has shown he still has investment chops. In 2007 he was one of many managers, including some Tiger cubs, to be short mortgage-backed securities, a bet that paid off handsomely.
But Robertson’s 2008 wasn’t perfect, as most of the cubs with which he invested lost money.
