Tiger Global hit by $17bn losses in tech rout
Tiger Global has been hit by losses of around $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history.
The run of poor performance means the firm — one of the world’s biggest hedge funds and a big investor in high-growth, speculative companies whose shares have tumbled since their pandemic peaks — has in four months erased around two-thirds of its gains since its launch in 2001, according to calculations by LCH Investments.
“The magnitude of the loss is breathtaking, especially for a fund with ‘hedge’ in its name,” said Andrew Beer, managing member at investment firm Dynamic Beta. “This shows how even the most talented and plugged-in tech investors failed to see the train coming down the tracks.”
The losses were estimated by LCH, a fund of hedge funds run by the Edmond de Rothschild Group, which is an authority on dollar gains and losses made by hedge funds for their clients and which compiles an annual list of the world’s top money managers.
Tiger declined to comment. Investors who put money into the fund at launch have made more than 20 times their initial investment, said a person familiar with the fund.
Still, the losses eclipse some of the $4tn hedge fund industry’s biggest drops of recent years. These include the $12.1bn lost by investment giant Bridgewater in 2020 during the market tumult caused by the coronavirus pandemic, or Melvin Capital’s loss of approximately $7bn during the GameStop retail trading frenzy at the start of last year.
New York-based Tiger, which recently managed around $90bn in assets, was founded 21 years ago by Chase Coleman, a so-called “Tiger cub” who worked at legendary investor Julian Robertson’s hedge fund Tiger Management.
Coleman’s fund has in the past made huge gains for investors, helped by punchy bets on tech stocks. By the start of 2021 he was ranked by LCH as the 14th best-performing hedge fund manager of all time, having made $10.4bn of gains, or a return of 48 per cent, for investors the previous year and a total of $26.5bn since launch.
But his fund has been badly knocked during the recent sell-off in speculative assets, as the Federal Reserve’s move to raise interest rates to curb inflation has damped the appeal of high-growth companies whose investment cases are often predicated on the promise of earnings far out in to the future.
The fund lost 43.7 per cent in the first four months of this year, the Financial Times reported earlier this month, more than double the 21 per cent decline posted by Wall Street’s tech-heavy Nasdaq Composite share gauge.
Tiger’s dollar losses, which are for its hedge fund rather than its private equity business, do not include the impact of a tech sell-off late last year, which left Tiger down 7 per cent for the whole of 2021.
laurence.fletcher@ft.com