When it comes to 2013 hedge fund returns, two themes have
emerged: One, a great many individual hedge funds way
outperformed the composite returns of 8 percent to 9 percent
calculated by the scorekeepers. Two, most of these funds still
fell short of the performance of the major market indexes such
as the S&P 500, which rose about 30 percent in 2013.
This is particularly exemplified by the Tiger Cubs and Tiger Grandcubs —
so called because the managers of these funds are descendants
of Julian Robertson Jr.’s Tiger Management Corp.
They are widely regarded as some of the industry’s
best long-short managers and stock pickers.
According to confidential performance data obtained by
Alpha for more than a dozen prominent Tiger-related
funds, just two or three outperformed the S&P 500 last
year. This is not too surprising since most Tiger Cubs are
long-short managers, and last year was very painful for most
investors who shorted. So all factors considered, most of them
still turned in at least respectable results.
Interestingly, the Tiger-affiliated managers who did best
last year were not the brand-name funds most often associated
with the firm. By far the best-performing Tiger-affiliated fund
in 2013 was Tosca Opportunity, which posted a
blistering 56 percent gain. The fund is managed out of
London-based Toscafund Asset Management, founded by Tiger Cub
Another strong performer was Greenwich,
Connecticut–based JAT Capital, which posted a 30.6
percent gain. The $2.2 billion fund was founded in late
2007 by John Thaler, a technology, media and telecommunications
specialist with Chris Shumway’s Shumway Capital
Partners. That makes Thaler a Tiger Grandcub, as Shumway, who
closed his hedge fund firm several years ago, previously worked
for Tiger Management.
Most of the big equity hedge funds run by Tiger Cubs posted
net returns for 2013 ranging from the midteens to the low 20s.
They include Charles (Chase) Coleman III and Feroz
Dewan’s New York–based Tiger Global
Management, up 14 percent; Lee Ainslie’s
Dallas-based Maverick Fund, up 16.3 percent; Jonathan
Auerbach’s New York–based Hound Partners,
up 16 percent; Stephen Mandel Jr.’s Greenwich,
Connecticut–based Lone Cypress, up about 18 percent
(gross); and Philippe Laffont’s New
York–based Coatue Management, which was up close to 20
Several prominent managers posted gains in the low 20
percent range in their main long-short funds. They include O.
Andreas Halvorsen’s Greenwich,
Connecticut–based Viking Global Equities, which
finished the year up 22.6 percent; David Gallo’s
New York–based Valinor Management, up 23.4 percent;
and Paul Hudson’s Greenwich,
Connecticut–based Glade Brook Capital Partners, up 21
These are generally impressive gains, given that most or all
of these managers also have considerably large short books.
However, only Tosca and JAT actually outperformed the widely
followed benchmarks, although another two came pretty close to
matching those gains and actually beat the MSCI index, which
many managers also benchmark certain funds against and which
was up slightly more than 27 percent last year.
According to Hughes, the Tosca Opportunity fund earned big
gains last year from positions related to the growth of U.K.
housing needs, a play that continues to benefit the fund.
Shares of Redrow, a housing developer, rose 80 percent last
year. Tosca also cashed in on the growth of the global office
service industry, gaining 90 percent from its investment in
Regus, a global company that rents office space.
"In both cases, the founder of the business is the largest
shareholder and aligned with the PM [portfolio manager]," says
Hughes in an e-mail.
Hughes previously served as head of the global financials
team at Tiger Management from 1997 to 2000.
Unlike most long-short Tiger Cubs, Toscafund specializes in
financial stocks, which fell out of favor after the 2008 global
financial crisis and during the European debt and euro crisis
in 2011 and 2012.
The firm's Tosca fund, a long-short equity fund, was up 30
percent last year net of fees. The Tosca fund’s
2013 performance extends the remarkable turnaround since Johnny
de la Hey took over as the fund’s portfolio
manager in December 2008 after the fund lost 67.54 percent in
the first 11 months of that disastrous year under the
leadership of Hughes.
De la Hey has been with Toscafund since its inception and
worked at Tiger from 1997 to 2000. De la Hey has posted a
22.6 percent annualized gain over the life of his
JAT, the other big winner last year, specializes in
technology, media and telecommunications, as do many of the
other Tiger Cubs. It achieved last year’s gains
despite a very low 31.2 percent average net exposure, according
to knowledgeable sources.
Thaler also is mostly a buy-and-hold investor, at least when
it comes to his highest-conviction stocks. For example, his
five largest longs at the end of the third quarter were Time
Warner Cable, Melco Crown Entertainment, LinkedIn Corp., 21st
Century Fox, and Yahoo. Combined they accounted for nearly 30
percent of the long portfolio, while the top ten account for
about 45 percent of assets. Rounding out the top ten were
Madison Square Garden Co., CBS Corp., Time Warner, Las Vegas
Sands Corp. and Pandora Media.
Nine of those stocks also ranked among the top ten at the
end of the second quarter, and four of them were among the top
six at the end of the first quarter: Time Warner, Las Vegas
Sands, LinkedIn and CBS. Sure enough, last year Time Warner
rose 47 percent, Las Vegas Sands was up 70 percent, LinkedIn
gained 88 percent and CBS climbed 66 percent.
Recent start-up Falcon Edge Capital, based in New York,
gained 28 percent last year. It was founded in mid-2012 by
Richard Gerson, a Tiger Grandcub as well because he was a
founding executive at John Griffin’s Blue Ridge
Capital. Despite its relatively recent launch, Falcon Edge had
more than $1.2 billion in assets at the end of April,
according to a regulatory filing.
At the end of September, its five largest holdings were
Cheniere Energy, which accounted for 11 percent of its
$1 billion in U.S. equity assets; American International
Group; Avis Budget Group; Groupon; and Ctrip.com International.
Altogether the top five holdings accounted for nearly 42
percent of equity assets. Cheniere, AIG and Avis Budget Group
were also the top three holdings at the end of the second
quarter and among the top four holdings at the end of
Last year Cheniere surged about 140 percent, Avis Budget
doubled and AIG rose more than 45 percent. Groupon jumped about
37 percent in the second half of the year alone.
Robert Citrone’s Norwalk,
Connecticut–based Discovery Capital Management,
another top performer, is not your typical long-short Tiger
Cub. Citrone combines a macro, top-down view with bottom-up
fundamental analysis, focusing on equities, credit investments
and currencies, both in emerging and developed markets. Last
year his flagship Discovery Global Opportunity Partners fund
rose 27.53 percent, while Discovery Global Macro fund was up
26.93 percent. This was in line with the MSCI index, a more
realistic benchmark for Discovery.
An earlier version of this story reported that
Johnny de la Hey was the portfolio manager of Tosca
Opportunity. He is actually the portfolio manager of the Tosca
Fund. Martin Hughes runs Tosca Opportunity. Alpha regrets the