With the death of Julian Robertson, Nasdaq hedge funds have lost their godfather

Along with George Soros, Julian Robertson, who died at the age of 90, was one of the last “big cats” of hedge funds. His company Tiger flourished during the golden age of alternative management (1980-2000). He was the inspiration for about forty merchants, managers, and analysts called “Tigers”. They worked with him and then launched their own hedge fund. They all praised him. “He was the hardest on us when we were making money. He was calm and almost intimate when the markets were against us. He just had to look at the screen with our positions to take a look at our performance at some point,” said David Saunders of K2 Advisors.

With a strong taste for technology stocks, Tiger graduates are still raining and shining on the Nasdaq today. Among these star managers, his godson Chase Coleman of Tiger Global was a huge success before he was trapped in the first half of tech stocks’ decline. “Julian was a pioneer and giant in our industry, respected for his abilities and integrity. I will be forever grateful to him,” said the director.

24 hours on 24 hours

Julian Robertson reminded colleagues who were seduced by a short weekend: “When you’re managing money, it’s 24 hours a day, 7 days a week.”

“He attracted people with the sheer force of his personality. He met singer Paul Simon (of the duo Simon and Garfunkel) and, based on his shared passion for baseball, convinced him to invest in Tiger. This was also the case with writer Tom Wolfe. Robertson knew how to use these superstars to attract other investors”, says journalist Sebastian Mallaby in his book (1).

Born in North Carolina, this former naval officer began his career on Wall Street at the brokerage firm Kidder Peabody. At the age of 48, he launched a hedge fund Tiger with a capital of $8 million. This period (1980) coincides with the beginning of a long bull run on stocks until the 1987 crash. It is also the beginning of the retirement investment plans (401K) launched in 1981 that would allow small shareholders to invest in Wall Street.

Soros model

Tiger originally specialized in US stocks, with 100 to 200 companies in the portfolio depending on the year. He is particularly interested in small and medium-sized businesses that are not followed by brokers and Wall Street firms. Same logic for countries, they are investing in Korea and Japan when they are not yet on the radar of major international investors.

As his fund grows, he invests in international stock markets and in new asset classes such as commodities, bonds and currencies. It follows the Quantum Fund model established by George Soros as global director. Between 1980 and August 1998, the beginning of the Russian crisis, his hedge fund generated nearly 32% per year, nearly three times the average return on US stocks (12.7% for the Standard and Poor’s 500 Index).

CEO of Gulf Cheating

On Wall Street, he’s also trying to guess which companies will be the subject of a takeover bid, particularly in sectors like the airline industry. The 1980s were already marked by a wave of debt-financed buyouts, particularly by private equity funds such as KKR. The fund also practiced short selling, a technique that was not widespread at the time. It allows Tiger to limit his losses and even make money when the markets are badly trending. It is short selling overvalued and mismanaged collections by incompetent management. According to legend, he sold his investment in a company when he realized its CEO was cheating in the bay, a very bad sign for him for the group’s accounts.

Berlin Wall

If he encourages his teams, broken down by sectors, to take initiatives, he keeps the last word on the investment. If the procedure is considered profitable, then it can be kept for several years. This is also the case for macroeconomic bets. When he has a strong conviction, he holds it against the prevailing opinion in the market. In 1983, speculation about the decline in oil began. He loses a lot of money at first but after 3 years the barrel has lost half its value.

The day after the fall of the Berlin Wall, one of its directors, John Griffin, now president of Blue Ridge, decided to invest in German companies, Deutsche Bank, Veba (community services) and Felten & Guilleaume (electrical cable), likely to capitalize on the reunion. He is one of the few who dares to make such a bet, as managers fear the economic impact (inflation, falling deutsch, etc.) of the Germany meeting.

web bubble

When the Russian crisis began in August 1998, Tiger was managing $22 billion, like Soros, and in all major markets (stocks, etc.). First warning, $2 billion lost in a few days due to the rising yen, the safe haven currency. Currencies have become one of the fund’s preferred asset classes. They have succeeded so far. However, it was the Internet bubble that two years later led to the closure of the hedge fund. Betting early, from 1999 to March 2000, that the Nasdaq bubble burst. His fund is disbanded and Julian Robertson decides to practically end his career the day the stocks begin to plummet.

However, he does not leave the sector. He would not invest his money in the markets anymore but by entrusting it to other hedge funds. Especially for everyone who worked with him and then went it alone. He also invests in wine, sheep farms, and golf in New Zealand, a country he’s frequented regularly since the 1970s. According to the Wall Street Journal, he’s also donated nearly $2 billion to charities. His fortune, estimated at $4.7 billion by Forbes magazine, must be partly donated to various associations and foundations. His three sons work in the family empire (institutions, real estate in New Zealand, investment firm). Alexander is the one who invests the family’s money in other hedge funds.

(1) “Richer Than God”, Valor Editions

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