When Tiger Asias Bill Hwang announced recently he was
handing back all of his outside money by the end of this month,
he reportedly told clients in a letter it was due to a
prolonged legal situation. He was referring to a
three-year probe by Hong Kong securities officials as well as a
U.S. Securities and Exchange Commission investigation.
As you are aware, the firm has been the subject of
government investigations of alleged trading based upon
confidential information and engaging in certain manipulative
trades in late 2008/early 2009 in Asian markets, Hwang
wrote in his letter. We continue to work to resolve these
matters in the U.S. and overseas and look forward to putting
them behind us.
Tiger Asia said it will become a family investment office
continuing to invest mainly in Chinese, Japanese and Korean
markets with emphasis on telecom, media, Internet, consumer,
property and financial stocks.
The fund one of Julian Robertsons first Tiger
seeds, in which he initially invested
$23 million is down to around $1.2 billion,
nearly half of which is Hwang's own money and over $250 million
is Robertsons, according to sources.
While legal issues clearly have weighed heavily on the New
York City firm, a recent run of mediocre performance has also
dogged this once high-flying hedge fund. In fact, Hwangs
recent performance struggle is a familiar story in the hedge
fund world: Basically, a young hot shot racks up early big
gains with small sums of money and then experiences a surge in
new money, only to post losses or lousy returns after most of
the investors get into the fund.
Tiger Asia told investors in the letter that since its
2001 inception, it has posted a 15.8 percent return.
However, at the end of 2007, Tiger Asia had a 40.4 percent
annualized return. By the end of that year he had nearly $8
Hwang, though, likes to take risks, and it has hurt him.
In 2008 when many investors and the global markets
suffered big losses Hwang finished down 23 percent. But
he had been up as late as August of that year. Investors say he
was heavily short in the first half of the year but went net
long 50 percent in the fourth quarter, turning bullish too
soon. He also suffered big losses from Lehman and
In 2009 he was up just 3 percent when the global markets
came roaring back after going net short again. This was
followed by a 1 percent gain in 2010 and 9 percent profit last
He made 3.72 percent through the first six months of this
year but was flat through mid-August, according to an investor.
So, he is still below his high-water mark.
To his credit, Hwang has been mostly net short since
Hwang implicitly admits disappointment in his performance,
stating in the letter: I wish that I could have done
better for you, especially during the periods of market
difficulties such as in 2008.