Chase Coleman is not the only hedge fund manager who has either worked for or been seeded by (or both) Tiger Management founder Julian Robertson to have had a strong year in 2011.
While Coleman’s Tiger seed was perhaps the top performing hedge fund manager of size last year with a 45 percent net return, several others tied in some way to Robertson also racked up impressive double-digit gains — a rarity in 2011 — while a number of others were in the high single digits.
This is quite a feat given that hedge funds lost an average of between 2 percent and 5 percent last year, depending on the database you consult. One database shows that roughly two-thirds of more than 400 funds lost money last year, while in general, a big chunk of funds ranged between up 2 percent or so and down 2 percent or so.
Also, Tiger descendants tend to be equity long-short managers, a tough strategy to make money with last year. But not for all.
For example, Fox Point Capital, founded by former Robertson protégé Charles Anderson, was up 30 percent. Sources say a bulk of Anderson’s gains came on the short side, especially overseas. He did very well betting against financial companies in Europe and technology in Asia. He also cashed in on shorts in the U.S. in the consumer and tech sectors. On the long side, Anderson was said to have made money in quality companies.
Anderson, who manages slightly less than $400 million, had worked at Tiger and then moved on to John Griffin’s Blue Ridge Capital before launching his own fund. So he had some pretty good mentors. In fact, he graduated from the University of North Carolina at Chapel Hill, Robertson’s alma mater, earning an AB in economics. He received his MBA from Stanford University.
An additional fund with a Robertson-rooted manager, Jonathan Auerbach’s Hound Partners finished 2011 up 18.97 percent, net of all fees and expenses. The fund manager, seeded by Robertson in 2004, told investors in his year-end letter that his long equity portfolio contributed 5.58 percent to the gross return while the short equity portfolio kicked in 17.73 percent. Most of the results came from stock picking in the developed world with no “material contribution” from macro bets, Auerbach told clients.
His big gain on the short side — about one-third of total profits from shorts — came from solar company stocks. At mid-year the position had cost him $30 million after the nuclear disaster in Japan. But by year-end it sharply reversed, turning into a $45 million profit. Calling the solar theme “the gift that kept giving,” Auerbach lamented there is not much market cap left in the industry to short, as “fundamentals have turned flat-out ugly.”
Auerbach disciple Scott McLellan of Marble Arch Investments fared just as well, notching a 19.32 percent gain last year. McLellan co-founded and served as a research analyst for Hound Partners prior to co-founding Marble Arch Investments in 2007.
Prior to joining Hound, he was an analyst at Highbridge Capital Management and an associate at Welsh, Carson, Anderson & Stowe, a private equity firm. He earned an MBA from the Kellogg School of Management at Northwestern University and a BS in commerce with distinction from the University of Virginia’s McIntire School of Commerce, another popular school among the Tiger set.
Several Tiger-linked funds generated gains in the high single digits. They include Bill Hwang’s Tiger Asia, which was up between 8 percent and 9 percent. For the Korean-born Tiger seed, this is his best year since 2007. He lost 23 percent in 2008 and was up only 3 percent in 2009 and 1 percent in 2010. As a result, he now manages just about $1 billion, down from a high of $8 billion.
Another Tiger cub who was up more than 8 percent last year was Andreas Halvorsen of Viking Global, who has probably enjoyed among the most consistent returns among the Tiger set in recent years. Sure, he was up just 3.9 percent in 2010. However, the prior year he gained 19 percent and was roughly flat in treacherous 2008.
Halvorsen, who was a senior managing director and the director of equities at Tiger before launching his own firm in 1999, is a Norwegian native who graduated from the Norwegian Naval Academy and served as a platoon commander on the Norwegian SEAL Team.
Other Tiger cubs or seeds posted modest gains this year. They include Robert Citrone’s Discovery Global Opportunity fund, up 3.58 percent; Christopher Burn’s Goshen Investments, (2.70 percent); Martin Hughes and Johnny de la Hey’s Tosca fund (1.14 percent); and Robert Karr’s Joho Capital, (0.30 percent).
Not all Tiger descendants fared well last year. Several of the older, more established brand-name cubs lost money. For example, Stephen Mandel Jr.’s Lone Pine Capital generated roughly 1 percent to 2 percent losses in its hedge funds and a 1 percent or so loss in its long-only funds, say sources.
Consumer-oriented issues were said to have fared well in both the U.S. and Europe, but they were offset by emerging market investments, which did the worst.
Another cub, Lee Ainslie’s Maverick Capital, lost nearly 15 percent.
