Julian Robertson Pulls Money from Nehal Chopra’s Ratan
The one-time rising star, whose fund once boasted annualized returns of more than 20 percent, has lost her biggest backer in Robertson.
Julian Robertson Jr. has given up on a one-time hot-shot manager.
The legendary founder of Tiger Management, who in 2011 launched the Tiger Accelerator fund to seed six hedge fund managers, told investors in the fourth quarter of last year he was redeeming from one of them — the Tiger Ratan Capital Master Fund, managed by Nehal Chopra, according to a person with knowledge of the situation.
Chopra’s firm, Ratan Capital Management, confirmed this in a recent regulatory filing. “In 2016, Tiger Partners, LLC and Tiger Accelerator Seed Holdings, L.P. fully redeemed its investment in funds advised by Ratan and terminated its ‘seed’ arrangement with Ratan,” it stated. “Ratan no longer shares revenues or any economics with Tiger.”
Ratan has even dropped the “Tiger” name from its funds.
At year-end, the firm reported having $375 million in regulatory capital, an inflated figure required by the Securities and Exchange Commission that includes leverage and notional values of securities. At the end of 2016, Ratan’s U.S. stock portfolio was valued at $165 million, up sharply from $135 million the previous quarter. In June 2015, Ratan had $1.4 billion in assets under management.
The firm also disclosed in the filing that it currently has just four employees. A Tiger spokesman declined to comment on any aspect of this story. Ratan did not return several calls seeking comment.
Chopra founded Ratan Capital in 2009 with $25 million in seed capital from Robertson. The Mumbai native enjoyed considerable buzz because she was a rare female member of the extensive web of Tiger descendants — and one of very few high-profile women running a hedge fund.
She was named an Institutional Investor Hedge Fund Rising Star in 2013. Her star brightened even more when she posted three straight spectacular years right out of the gate, gaining 26.3 percent in 2012, 46.8 percent in 2013 and 22.3 percent in 2014.
However, Chopra’s fate sharply reversed course in 2015. After posting a 15.5 percent gain in the first quarter, the fund collapsed, eventually producing a 19 percent loss for the year — a swing of more than 34 percentage points in just nine months.
The fund continued to tumble in the first half of 2016. It suffered a 51.59 percent drawdown from May 2015 through June 2016.
It rebounded sharply in the third quarter, cutting its 2016 loss to 12 percent through the end of the third quarter.
Like many of the Tiger Cubs and Seeds, Ratan runs a concentrated portfolio. But Chopra always took it to a much greater extreme. Ratan typically owned just seven to nine individual stocks.
It was especially hurt by its huge bets on drug companies Valeant Pharmaceuticals International and, to a lesser extent, Allergan, which started to suffer big losses in the middle of 2015. They accounted for 35 percent of assets at the end of June 2015 — just before the two stocks, especially Valeant, went into their tailspins. Valeant fell 75 percent in the first quarter of 2016 alone. At the end of the second quarter of last year, Ratan liquidated four positions, including Valeant and Allergan.
In the third quarter Ratan liquidated four positions again, including two major holdings: Starz, the cable television network that was the firm’s third-largest position, and bottler Coca-Cola European Partners.
Interestingly, at the end of the fourth quarter Ratan was much more diversified, holding 20 individual stocks, a lot for the firm. All but six were new positions.
But, apparently this change — or tinkering — of its strategy was a case of too little too late for Robertson.