We’ll call it a case of biting off more than you can chew.
Tiger Global, the so-called “Tiger Cub” offshoot from Julian Robertson’s famed Tiger Management, closed on a new, $13 billion growth fund earlier this year. After adeptly riding the tech wave for more than two decades, the fund was the envy of every 2-and-20 outfit around. Oh, what a difference a 50 bps fed rate hike can make.
Internal documents reviewed by Bloomberg reveal the fund has been crushed in the rising interest rate environment, falling 14% in May and a whopping 52% on the year. Now, management must channel their inner Bobby Axelrod and convince investors they can claw back the losses.
Streak of Tigers
Tiger’s hedge fund has been a money loser every month in 2022, and along with the firm’s long-only and crossover funds, has lost roughly $17 billion last year. That’s enough to evaporate nearly two-thirds of dollar gains made for investors since it launched in 2001.
The firm first made a splash by investing in Chinese internet stocks during the dot-com bubble bust, and developed an investment strategy focused on the size of opportunity, with valuation coming as a secondary consideration. That’s helped Tiger invest early in eventual big-winners, but has left it exposed as the broader market reawakens to the importance of fundamentals.
Now, with tech stocks plummeting and the IPO market cooled, Tiger is introducing more investor-friendly terms to keep backers around:
- Tiger is cutting the management fees at its hedge fund by 0.5% to 1% until December 2023. The firm also charges 20% performance fees on positive returns.
- Tiger will let clients redeem up to a third of their investment this year, more than the 25% limit in normal years to try and assuage investors who want more money back sooner.
“We take very seriously that our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect,” Tiger wrote to investors.
Head in the Clouds: Yes, tech is still down. But yesterday many cloud stocks mounted a strong comeback, with the WisdomTree Cloud Computing fund having one of its best days of the year. Not much, but it’s a start.