After a tough 2021, his Tiger Global Management has posted a plethora of losses this year that have ruffled the industry – a 34% drop for the firm’s hedge fund through March. The pace of the reversal has stunned everyone, given that Coleman is celebrated as one of the brightest stars of his generation, a standout among elite money managers mentored by the famous Julian Robertson.
The bad trend has been largely bet on stocks, which have been battered by market volatility amid Russia’s invasion of Ukraine and a serious rough patch for fast-growing tech companies in the US and China that have spent so long. Tiger Global’s profits have increased. On Friday, the poor performance inspired humility, something the $100 billion giant has rarely had to express over its two decades of nearly unblemished success.
“At this moment, we are humbled, but steadfast in our belief and confident of the opportunity ahead,” the firm’s investment team wrote in a letter to investors. “We are reevaluating and refining our models using all the inputs available to us.”
A Tiger Global spokeswoman declined to comment.
Created by Coleman and his partner Scott Schlieffer, Tiger Global has long been seen as a return to the industry’s glory years, when double-digit returns were the norm and hotshot managers favored winning companies and lost losers. shortened. Coleman, 46, showed that fees of 2 and 20 could still be a price to pay: In 2020 alone, his flagship hedge fund jumped 48%.
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The recent turnaround in Tiger Global’s fortunes has hurt more than Coleman’s professional pride. In the firm’s $35 billion fund focused on public companies, this year’s losses have hit more than $10 billion to investors, including foundation, endowment and pension funds, as well as insiders from Tiger Global. And according to calculations by the Bloomberg Billionaires Index, Coleman’s personal wealth declined by $1.3 billion.
Coleman worked as a technology analyst at Robertson’s Tiger Hedge Fund for less than four years before becoming the official Tiger Cubs in 2001, the term for the Robertson Protects who started their firm.
Originally Tiger Technology, the new store expanded into payments, education and other areas and was renamed Tiger Global. In the early 2000s, Coleman and Schlieffer added private investment to the mix, realizing before many of their peers that they could achieve higher returns outside of the public markets.
The firm’s first serious hit occurred during the 2008 financial crisis, when it fell 26%, followed by a 1% profit the following year. Coleman vowed to return to his technological roots and avoid industries where politics or macro events might interfere.
That approach paid off handsomely. As of 2020, Tiger Global had an annual return of over 20% in its hedge fund, with losses in just two years.
But now its biggest bet is dragging the fund down. While markets this year were already troubled by high inflation and expectations of a hike in rates, Russia’s war against Ukraine flew with risk.
The tech-heavy Nasdaq 100 and the Russell 2000 small-cap each posted a 20% decline in the first quarter, though losses were narrowed at the end of March.
Tiger Global’s particular undoing was closely tied to the tech companies, especially China, that made it such a success.
An example is JD.com Inc. which began as a $200 million bet in 2009 and eventually made a net profit of $5 billion. As of December 31, it was the fund’s largest holding.
Battered by markets, a regulatory crackdown in China and rising tensions between Beijing and Washington, JD.com is down 20% in New York business last year and 16% in 2022.
“Ultimately, we should have sold more shares in our portfolio in 2021,” Tiger Global’s investment team said in Friday’s letter.
The Fund is not alone in its struggle. Fellow Tiger Cubs Philippe Lafont’s Coteau Management, another firm that did a great job on the back of its tech bets, fell 10% in the first quarter. At year’s end some of its largest equity holdings, Rivian Automotive Inc. and Moderna Inc., declined 52% and 32%, respectively.
The MSCI World Information Technology Index, which rose 562% in the 2021 decade, fell 10% in the first three months of the year, according to data compiled by Bloomberg.
Tiger Global’s hedge fund’s losses extended to its private holdings.
He said in a letter to clients that managers have “adjusted valuations down” for the fund’s private investments to pressure their public-market peers. The fund owns shares in private companies including ByteDance, Stripe, Checkout and Databricks.
It’s unclear what those mark downs mean for Tiger Global’s venture capital business, where assets stood at $65 billion at the end of last year.
As of August, nearly a quarter of Tiger’s private stakes were in China, which has become a minefield for investors amid regulatory action.
President Xi Jinping tightened his grip on the country’s tech sector, imposed new sanctions and imprisoned some officials to rein in what they see as the excesses of capitalism. While recent signs from the ruling Communist Party suggest that action may be easing, the policy has shaken confidence in even the largest and most successful firms.
Also weighing on share prices has been an auditing dispute between China and the US, which would result in Chinese companies being pulled out of US exchanges. There was fresh optimism on Saturday that such an outcome could be avoided after China signaled a willingness to give US regulators full access to corporate audit reports.
In its letter, Tiger Global said it was “encouraged” by China’s recent support for stable capital markets and statements by the government focused on the competitiveness of tech companies. Still, the firm said it knows the risk remains and will be “data-demanding as the situation develops.”
Under Schleifer’s leadership, Tiger’s Private Investment Partners Fund – which takes non-controlling stakes in startups – has delivered an average annualized return of 27%. Last year, those funds grew 54% and returned $4 billion to investors, according to a person familiar with the matter. Even in the midst of this year’s turmoil, investors’ appetite has not waned: In Friday’s letter, the firm said it had received a monthly net inflow into its public funds this year and most recently in its PIP 15 venture fund. was closed with $12.7 billion.
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