Tiger King
Julian Robertson, who recently passed away at the grand old age of 90, was a heavyweight of the hedge fund industry.
The founder of NY-based Tiger Management mentored and inspired hundreds of people, many of whom have gone on to become masters of the universe in their own right. Names include Tiger Global, Lone Pine, Coatue Management, Viking Global, D1 Capital and Pantera Capital.
Robertson was also a philanthropist who gave generously (more than $2bn) to charity via his own family foundation and Tiger Foundation, a nonprofit that’s provided more than $250 million in grants to organisations working to break the cycle of poverty in New York City.
Building a dynasty
But his real impact lies not just in what he created – a fund management business boasting average annual gains of more than 25% for the 20 years it was up and running, and $21bn under management – but in the constellation of lives he touched and influenced.
Stephen Schwarzman, Blackstone's CEO, described him as “one of the few people in the hedge fund history who created a dynasty.” Up to 300 firms that can trace their roots to Tiger Management, through mentorship and seed investments.
A smart model
Robertson’s way of incubating funds was simple, and smart.
Each so-called “Tiger cub” ran a slice of his considerable wealth, as well as their own money and accept outside investors. They got to keep most of their management and performance fees and in return, Robertson owned a small piece of their funds.
These Tiger cubs include Tiger Global, the hedge fund turned VC that has bet big on tech in the last few years, combining investments in public and private markets.
Simple but not easy
Like top performers everywhere, Robertson mastered the subtle art of keeping things simple in a very complex industry. He bought underpriced stocks with good earnings prospects, and sold their opposite. As the FT notes:
"His aim was to find the best 20 stocks to buy, and the worst 20 to bet against. While valuations were important, they could often be secondary to a company’s position in an industry or barriers to entry."
There’s a lot of truth to the fact that if you’re an industry leader, benefits accrue to you that far surpass what the #2 and #3 receive. Many of Robertson’s protegees have leveraged this insight to grow huge investor franchises.
Timing is everything
Robertson’s influence spans individuals and funds with markedly different investment styles. His value driven approach is hard to reconcile with Tiger Global’s aggressive tactics investing in late-stage private companies at inflated valuations.
This latest generation of Tiger Cubs would do well to recognise that Roberton’s genius lay not just in generating double digit returns and asset gathering – he also knew when to walk away when the market didn’t feel right.
In 1999 he questioned the silly prices being paid for shares in early internet companies. In early 2000 he came to the conclusion that, “there is no point in subjecting our investors to risk in a market which I frankly do not understand,” and returned all capital to investors. In April 2000, the tech market imploded, and he was vindicated.
The GOAT of the hedge fund industry
Robertson did more than build a single fund with $8 million in AUM to a fund management behemoth with $20 billion in under management. He built a decentralised hedge fund empire.
And for that reason, he might just be the greatest investor of all time.
