Tiger Global Hammered... Can Anyone Provide Rumors/Updates on Imploding Hedge Funds?

See below for excerpts from a Financial Times 5/10/22 article about Tiger Global losses below. PTON, ZM, AFRM and other pandemic favorites / "tech" stocks currently getting hammered amid Ukraine invasion, higher inflation, supply chain woes, post-pandemic return-to-normalcy, and rising interest rates / discount rates as Fed takes action, driving significant losses at some of the Tiger cubs and other hedge funds that the forum normally puts on a pedestal. Surprised there is so little chatter about this.

Can anyone with inside knowledge comment on what they're seeing and hearing from colleagues / friends around the buy-side? How are firms like Whale Rock coping with these new developments? Are any firms on the verge of collapse or planning on unwinding? I can't imagine LPs will be okay with these funds collecting performance fees with losses this steep, which should absolutely be impacting people's careers / bonuses. 

FT ARTICLE (excerpts only; pasting link for FT subscribers who have access)

https://www.ft.com/content/caa49a44-18a3-4e51-9dfb-aad61767fe25

Tiger Global has been hit by losses of about $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history. The run of poor performance means the firm... has in four months erased about two-thirds of its gains since its launch in 2001... “The magnitude of the loss is breathtaking, especially for a fund with ‘hedge’ in its name,” said Andrew Beer, managing member at investment firm Dynamic Beta. “This shows how even the most talented and plugged-in tech investors failed to see the train coming down the tracks.”...

...Coleman’s fund has in the past made huge gains for investors, helped by punchy bets on tech stocks. By the start of 2021 he was ranked... as the 14th best-performing hedge fund manager of all time, having made $10.4bn of gains, or a return of 48 per cent, for investors the previous year and a total of $26.5bn since launch. But his fund has been badly knocked during the recent sell-off in speculative assets... The fund lost 43.7 per cent in the first four months of this year... Tiger’s dollar losses, which are for its hedge fund rather than its private equity business, do not include the impact of a tech sell-off late last year, which left Tiger down 7 per cent for the whole of 2021.

 

Brutal... saw that the Sondheim had some words of criticism for AMZN on Twitter. Crazy that these sophisticated guys don't seem to understand that buying these names was both a bet on 1) strong intrinsics and fundamentals but also 2) interest rates remaining low. I would've been trimming down aggressively as soon as inflation started to jump. Would've been closing out positions completely after the Ukraine sanctions hit.

 

Even as literally just an intern, I could tell that valuations made no sense. If these sophisticated hedge fund investors couldn't see that, they either couldn't use common sense, or more likely, just didn't give a shit. While times were going good, they were still collecting fat pay checks.

 

honestly from what i've seen on this site, sundheim is the most simped tiger cub manager.

 

Rumor is Chase Coleman III is an airheaded lacrosse kid that grew up with a silver spoon shoved up his ass and got his daddy to suck julian robertson off into giving him most of the money after julian got bored (but we all know this is the truth)

 

Yep. Coleman was shit, good at fundraising but that's his core competency. 

Not a bad skill to have during a 13 year bull market when your main strategy is to go balls deep tech and short industrials and energy. But it works until it doesn't. 

Julian Robertson is still the Godfather and OG. For real investing chops I would think Lone Pine, Coatue, and Viking are better for learning how to pick stocks.

 

Interesting, thank you. Given their losses, I can only take that to mean they are seeing some attrition on the back of low/non-existent bonuses moving forward. That being said, the fact that they are actively recruiting and also running such a wide process implies they aren't looking to unwind, but are desperate to backfill some of the open seats. Sounds like a nightmare. 

 
Most Helpful

Hard to read but reliable. Thru end of April so doesn't capture recent pain.

[Fund April YTD   

12 West Capital -20 -50   

Alkeon -10 -27   

Armistice 2 2     

Averill 7 18    

Avidity -0.1 -8    

Avoro -10 -17   

Balyasny 6.75  

Candlestick 1.1 -9    

CatRock -11 -41   

Cinctive Flat  

Coatue -5.75 -15.25

Crescat Long/Short 1.1 19.4  

Dellora -7 -22   

EcoR1 -8 -18   

Eversept -1.5 3     

Greenlight 10.6 15.4  

HoneyComb -4 -21   

Jericho -4.2 -11.4 

Lone Pine -5 -30   

Melvin Capital -3.3 -23.3 

Millenium 2 5.7   

Onsight -2.3 -4.8  

Paradigm 1.5 -4    

Perceptive -11 -27   

Pershing Square  -8.1 -9.6  

PuraVida -10 -17   

RTW -13 -28   

Samlyn -2.1 -8.7  

Schonfeld Fundamental Eqty 4.5   

Sculptor/Och Ziff -3.09 -5.86 

Tiger Eye -5.5 -13   

Tiger Global HF -15 -44   

Tiger Global LO -25 -52   

Viking -1.2 -9 ]

 

Lol they've been around, this description is  completely based off my vibes from loosely following them:

Seems like 2 guys with a terminal, they do macro. Some strongly opinionated stuff, usually wrong/hyperbole. But directionally accurate I think. 

Can't really give them much/any shit because their returns have been so good. But a lot of macro sky is falling stuff

 

So many ppl here shitting on Tiger saying how could they not have known valuations were stretched at all time highs. Clearly none of these ppl actually worked professionally at a HF where you have to produce PnL every year. You think they didn’t think about interest rate risk or being over levered to Nasdaq? Of course they did. But what did you want them to do? Buy a bunch of shitcos and be like Greenlight? I agree that risk mgmt is extremely reckless here but the point about knowing valuations were stretched is just dumb to me. From a guy that works at a pod

 

Tiger's YTD losses of $17B represent roughly 52%, so let's assume the assets were ~$33B at 12/31/21. 1.5% management fees on $33B would represent ~$500M of mgmt. fees. $500M... even after you take overhead out, it's a staggering amount of money for such a small number of investment professionals. (check my math lol)

I understand your point about not working at a hedge fund and thereby not understanding the nitty-gritty and all the intricacies of the challenges that a professional would face. Fair point. But - as an outsider looking in - what I struggle to comprehend is how a fund could be paid ~$500M of mgmt. fees just to lose $17B dollars... These guys are being paid way too much money to make mistakes at this scale, and I don't think it makes sense to create any kind of excuses for them.

Furthermore, looking at sonibubu's performance list above, most of the managers are actually outperforming the NASDAQ YTD (which was down 22% YTD on 4/29), including Viking and Coatue. Viking also happens to be outperforming the S&P 500 YTD (was down ~14% YTD on 4/29). So this doesn't really appear to be an industry issue as much as it is a Tiger issue. Just look at how their underperformance stands out.

 

I don’t think it’s a dumb point (been in the business for 15+ years) but I do think it depends on how the fund sells itself to clients. At the end of the day, it is very hard to be an outsider when each fund structures their targets differently, and agrees with their investors on what they should expect over time. 

That being said, I cannot imagine that they sold themselves this way (although it also wasn’t like they were selling themself as market neutral). Losses of this magnitude aren’t acceptable for basically all investors, and something with their process didn’t work properly. It’s not saying that they should have known valuations were stretched, people can say that for years and be wrong, but to not (at least it appears this way) change anything as the world was going from COVID, money printing, etc, to inflation, fed tightening, etc seems off and not what I would expect from sophisticated investors. 

But at the end of the day, it is for the fund and investors to figure out what is acceptable. 

 

Can't hedge funds make drastic moves?

Ackman dumped his entire NFLX position.

Why is it such a crime to hold cash? Baupost does it. I guess it flies directly in the face of how Tiger made their gains... sort of a "live by the sword die by the sword" situation. How do you explain to greedy investors who've road off growth for a decade that it's time to sell everything and wait. They'd have to do it in a month too else everyone would read that 13F and they'd probably precipitate the start of the crash in that universe.

 

Why hold cash when you can hedge? Leverage can be tough, but managing to keep net lower than gross, and gross lower than 100%, seems fine 

 

Here's the problem with this though: 

Tiger is net long and selling themselves as "Long-term, private equity style investors who choose stocks to hold for the long term" or some garbage like that.

They are not a trading shop. If you want a fund that generates PnL every year, invest in Citadel or Milennium or Balyasny or one of the many copycats. They'll actually do a good job of risk management and staying totally market neutral. Your returns will actually be from alpha.

The reason Tiger doesn't do this is because markets usually go up, and tech has been crushing it the past 10 years. Riding the momentum wave isn't a great way to invest for the long term but it sure does make for a good marketing tactic. LPs are dumb and chase performance, markets go up, and tech has been crushing markets on the basis of massive unsustainable multiple expansion. So the easiest way to raise money is to go levered long tech. The problem is from an investment standpoint, you should just buy QQQ instead.

So the answer to your question: What are they supposed to do? Well they're supposed to generate alpha and hedge their book. Which is what hedge funds are supposed to do. If they can't do that, which most people can't, they should pack up their shop. 

Like I said, it's just as much the fault of LPs for giving jokes like Tiger money, but Tiger is also a joke.

 

to those that work for crossovers...how much of tiger (and other funds)'s hodling has to do with some of the names having been venture investments (e.g. pton)? even if sequoia ran their numbers and thought that doordash (and others) would drop precipitously, could they really sell with their motto being to partner with their founders beyond IPO and their relationship with tony xu? same with altimeter and snowflake, etc. I understand that these names are prob a minority of their public book, but just a thought that for crossovers, the interests of the public vehicle and private vehicle / entire fund manager aren't aligned.

 

This is an interesting point, along with the above comment. It's unclear how these crossovers were pitching themselves to LP's. If LP's consider them hedge fund vehicles then obviously their performance is terrible. But if LP's place them in the VC bucket then these drawdowns are less damning. Private VC funds will probably have even worse performance this year but it will take a while to manifest.

 

It is weird to me, looking at Tiger's 13f filing how concentrated he was, almost wholly tech, a shitload of kathy wood stuff.

In the envoriment this year, the insanely high PE stuff, the highly speculative growth stuff is basically the same trade. All that stuff basically moves in sync most days.

So it's basically one big bet,this seems crazy to me from a risk management standpoint.

 

Everyone’s saying why didn’t they hedge their positions. Fine -  but it’s hard to hedge when SE is down 80% YTD. Sure they could’ve shorted a bunch of shit tech companies but you need to remember these are position sizes in the billions. To have hedges or single name shorts at that size, it’s extremely tough. Also no one would have wanted to short in size (to the point where you have to disclose) because the risk was too high that you could get a squeeze event like GME. That’s a legitimate risk people think about with shorts at that size.
 

So you either have a few big single name shorts or you have many small shorts as your hedge but there is also a limited number of companies where you can build a short thesis on. But wait - you could’ve shorted Nasdaq instead and I think that’s fair. But you’re probably fucked either way if you hedged with Nasdaq. Look at SE, Peloton, Carvana, PayPal etc. Its all a giant shitshow versus Nasdaq. But ok - maybe you short way more Nasdaq than you are long a single name. That would’ve been a painful hedge in most scenarios. Bottom line is you can’t hedge out risk you are taking which in this case could be anything idiosyncratic, but probably a fuck ton of crowding into similar names more so than anything in my view.

 

Out of curiosity could they have bought puts in the QQQs similar to what David Tepper did. ARKK would have been another option to short or buy puts in.

 

It’s almost as John bogle and Peter Magellan were right…it’s best to just passively invest in the market and spend your time doing stuff you love.

It’s almost as if luck / insider cheating makes up most of the “skill” of these funds.

I mean, if you run a hedge fund it’s a sweet gig. You get high fees and get a piece of the upside, and your still get fees when you suck. You have a good 5 or 10 year run and you’re set for life no matter what. And you’re mostly swindling high net worth people or rich endowments. Sure, sometimes you swindle pension funds and actually hurt some working class people, but that’s life.

 

I think some of the people defending Tiger are missing the point. This isn't about "hindsight is 20/20". Tons of investors have been criticizing these Tiger cubs as levered betas for years (especially the market neutral investors). In turn, the people working there were typically smug and arrogant that it was actually the quality of their investment process and that they just possess a combination of better foresight and ability to withstand volatility enabling them to outperform the market. Now the tide has gone out and... it turns out they were levered tech betas. 

 

what does through may mean? Does that mean returns from may 1st to may 30th or from january 1st to may 30th?