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.
Hindsight is 20/20
That's right. I needed hindsight to detect that there was a bubble in high-growth/tech stocks driven by a decade-plus of low inflation and low interest rates... if only these multi-billion dollar hedge funds had hindsight. How else would they have been able to see it?
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.
by "simped" you mean followed like a cult leader? Probably because unlike Chase, Dan came from a public high school, got into Wharton, THEN built his career and actually had visible passion for the markets even at Wharton. Being on VIC as a college kid especially back then is admirable.
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.
I know people who worked at all 3. Imo lone pine's process is a joke. Coatue is terrible environment but actually trained some killers who ended up doing super well elsewhere. Viking used to be great but lost a bunch of good PMs and new PMs are jokes.
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 ]
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.
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.