A report in The Wall Street Journal that Julian Robertson is mulling a “seeding” fund or a fund of hedge funds for outside investors is intriguing. After all, there are clearly more Tiger Management alums — also known as cubs — than descendents of any other hedge fund firm. And for the past decade, Robertson has seeded several dozen up and coming managers, taking a piece of the action in exchange for providing rthe managers with some of his own capital and access to his friends and firm’s infrastructure.
Having the word Tiger at the beginning of your fund’s name is not too bad either.
Robertson’s timing, however, may not be that great. Ironically, this year many of the Tiger cubs — especially many of the most famous and largest — are struggling and are among the worst-performing hedge funds in what has been a volatile year for investors in general. They include long-short equity funds such as Andreas Halvorsen’s Viking Capital, which was down about 4.7 percent through June 30 and Lee Ainslie’s Maverick Capital, off 3.3 percent through July 2.
Stephen Mandel’s Lone Cypress, his long-short fund, was off about 3.6 percent while Lone Cascade, his long-only fund, was down about 4.6 percent. Sources say Mandel’s longs did pretty well on a relative basis but he was hurt by short positions in economically sensitive stocks. Keep in mind that Mandel is typically 40 to 60 percent net long and that his long-short funds typically have the same long portfolio as Lone Cascade.
One Tiger cub even scaled back his operations in the first half. Steven Shapiro’s Intrepid Capital Management shut down all of its funds except for its flagship fund after being down 4.5 percent through April. Through May, Intrepid Enhanced, a small fund, was down 12 percent. According to reports, Shapiro, who covered tech stocks for Tiger for four years, came into the year bullish on tech and large caps. He blamed his problems this year on short sales and his stock selection in general.
One of the worst-performing Tiger cubs is Millgate International’s James Lyle. The Brit global value investor, who grew up in Hong Kong, was down 10.3 percent in the first half of the year. Lyle, who co-founded his firm in 1997 with Martin Woodcock, was a Managing Director of Tiger Management from 1993 to 1997.
In a letter to investors in July, Lyle lamented that June was the fund’s fifth consecutive month of underperformance. As a result, at the beginning of July, he said he was trimming a few long positions and was in the process of adding several short ideas. One of them was Anglo Platinum in South Africa, on the belief that platinum demand will fall short of market expectations due in part to the withdrawal of the global “cash for clunkers” stimulus.
Bill Hwang’s Tiger Asia, one of the most successful Tiger seeds, was up 6.2 percent in the first half of the year, although he gave back 5.9 percent in June. The Korean native last year was accused by Hong Kong regulators of insider trading and market manipulation.
Dwight Anderson of Ospraie management is enjoying mixed success since the commodities specialist liquidated his Ospraie Fund two years ago. This year, his Ospraie Equity fund is up 8 percent (gross of fees), while Ospraie Commodities Fund is down 4 percent.
Over in London, Martin Hughes’ Toscafund was up less than 1 percent. Sounds pretty stable, considering Hughes, who was a portfolio manager at Tiger in the 1990s, was down 65 percent in 2008 and then rebounded by 43 percent last year.
Several Tiger Cubs are faring pretty well this year. Joho Capital, the Japanese-oriented fund run by Robert Karr, was up about 7 percent in the first half of the year. He ran Tiger’s Japanese operations for three years before launching Joho in New York City in 1996.
Perhaps the most successful Tiger cub this year is ex-seed Christopher Burns of Goshen Investments. He is up more than 17 percent so far this year.
