Chase Coleman’s hedge fund Tiger Global ended the second quarter nursing heavy losses amid a tech inventory rout that has brought on efficiency throughout one of many world’s largest hedge funds to plummet.
A protracted-only fund the agency manages ended the second quarter down 63.6 per cent after charges, in keeping with a letter it despatched buyers seen by the FT, whereas the agency’s flagship fund ended the primary half of the yr down 50 per cent after charges.
“In reflection on the first half of the year, it is clear we underestimated the impact of rising global inflation and entered 2022 with too much exposure,” the agency advised buyers.
Tiger stated it had prior to now dismissed fears of inflation as a result of it believed the period of technological change was “deflationary”, a manoeuvre that had labored via the post-crisis bull market in shares. Over the previous decade, the hedge fund’s heavy publicity to expertise and software program firms within the US and China had made it among the many finest performing and quickest rising hedge funds on the planet, recording tens of billions of {dollars} in income.
However, Russia’s invasion of Ukraine, together with surging inflation and a hawkish Federal Reserve, caught the fund unprepared.
“This time, however, we did not appreciate how unique the circumstances were that enabled inflation to rise and persist,” the agency stated, admitting it was overexposed to extra unstable monetary markets.
Tiger couldn’t instantly be reached for remark.
The losses have chipped into Tiger’s enviable file. Its flagship fund, launched in 2001, has now recorded internet annual returns under 15 per cent, whereas the long-only fund launched in 2013 has returned an annual common of lower than 4 per cent.
The agency’s sprawling portfolio of personal investments continues to melt the blow of losses from its holdings in liquid public markets.
A so-called “crossover” technique fund, which blends Tiger’s publicly traded and privately held investments, shed almost 37 per cent on a internet foundation within the first half of 2022.
The agency marked down its portfolio of personal holdings additional within the second quarter regardless of what it characterised as enough money positions and “positive operating performance overall”.
Though Tiger admitted to misjudging the volatility that has come this yr, it advised buyers it might preserve the identical method it has held because it was based by Coleman within the wake of the dotcom bust. He began Tiger Global after working underneath hedge fund billionaire Julian Robertson, who closed his Tiger Management in 2000.
“[W]e believe the same approach we applied in those first 20 years — with improvements and additional perspective from new battle scars — will recover losses and generate the long-term, superior performance that is our mission and expectation,” the investor letter stated.
The agency has been trimming holdings in teams during which it has “low conviction”, it stated, and rising its positions in companies it deems “the best companies at interesting prices”.
