Tiger Cubs

Tiger Management — History of Julian Robertson

Tiger Management was founded in 1980 by Julian Robertson, who started his firm with $8.8 million in assets under management (AUM).

From the fund’s inception to the late 1990s, Tiger Management’s AUM grew to approximately $22 billion, with an average annual return of 32%.

Following multiple years of underperformance and disappointing returns, after which the firm’s AUM declined to $6 billion, Robertson decided to shut down the firm, to the surprise of many.

Despite earning outsized returns for two decades, Robertson stated that he could no longer make sense of the current markets, specifically the trends that led to the “dot-com bubble”.

In a letter to his investors, Robertson wrote that there was no reason for him to continue “subjecting to risk in a market which I frankly do not understand.”

The firm’s legacy has continued to the present day, however, as numerous former employees of Tiger Management have since set up their own firms.

As part of shutting down his firm, Robertson provided the seed funding for most of these newly formed hedge funds, coined “Tiger Cubs”.

Tiger Cubs — List of Hedge Funds

While it is often cited that there are around thirty hedge funds that can be considered Tiger Cubs, more than 200 different hedge funds trace their roots to Tiger Management, according to LCH Investments.

Not all the firms listed in the table below are so-called “first-generation” Tiger Cubs.

Certain firms are those with origins that trace back to Tiger Management, which are frequently called “Tiger Heritage”, “Grand Cub”, or “Second Generation” Tiger Cubs.

Tiger Management Investing Strategy

Julian Robertson’s Tiger Management employed a long/short investment strategy designed to profit from correctly picking the right stocks on which to take a long position and the worst stocks to short-sell.

Originally, the primary strategy was oriented around finding undervalued and overvalued stocks mispriced by the market, but the number of opportunities soon diminished as the firm’s AUM grew.

Around 1999, Robertson publicly acknowledged that his past strategy of picking undervalued stocks (”cheap” stocks) while shorting overvalued stocks was no longer as effective.

In the later stages of Robertson’s career, his firm began trading more frequently (e.g. betting on commodities) and investing in themes based on the global economy and political developments, an investing strategy often called “global macro”.

Julian Robertson Quote

“The mistake that we made was that we got too big.”

– Julian Robertson: A Tiger in the Land of Bulls and Bears (Source: Biography)

Tiger Cubs Strategy and Fund Returns

Each of the Tiger Cubs led by proteges mentored by Robertson utilize their unique strategies, but one common theme is that they focus on performing in-depth diligence into a company’s fundamentals.

For instance, many of the Tiger Cubs are known for continuing the practice of highly-collaborative, time-consuming team meetings where potential investments are pitched and discussed internally among the team members — but notably, these meetings are specifically meant to encourage vigorous debates.

Once an investment proposal received the green light, Tiger Management took substantial bets on the position, even if it was highly speculative and risky, which the firm’s long-short strategy helped offset.

Robertson was also weary of the growing technology sector, and his refusal to invest in early dot-com companies was among the factors that ultimately led his firm to close — yet interestingly, many Tiger Cubs have since become leading technology-oriented investors, such as Tiger Global and Coatue.

One of Robertson’s unique traits, which many attribute to his long-term success, was his ability to recruit and hire the right employees and take care of their well-being so that they can perform well, i.e. encouraging physical health and promoting exercise.

In fact, Robertson attempted to establish a systematic method of recruiting through a psychoanalysis test consisting of 450 questions (and lasting 3+ hours), where the objective of the questions was to identify how the applicant thought about achieving returns in the stock market, risk management, and teamwork.

Like Robertson, many of his hires were those deemed to be hyper-competitive with a track record of success in fields often unrelated to investing, as demonstrated by many former employees being college athletes.

Collapse of Archegos Capital (Bill Hwang)

While Tiger Cubs are highly-regarded in the hedge fund industry, not all of them have fared well (and many stand accused of predatory short-selling, insider trading, and more).

In particular, Bill Hwang, the founder of Archegos Capital Management, saw his firm collapse in 2021, resulting in around $10 billion in total losses incurred by banks.

The collapse of Archegos prompted federal prosecutors to charge Bill Hwang with conspiracy to commit fraud and market manipulation.