Key Takeaways
- • Tiger Cubs underperformed significantly in the measured period, with flagship funds posting losses ranging from 3.3% to 4.7%, including Andreas Halvorsen's Viking Capital (down 4.7%), Lee Ainslie's Maverick Capital (off 3.3%), and Stephen Mandel's Lone Cypress (down 3.6%), according to Institutional Investor reporting.
- • Steven Shapiro's Intrepid Capital Management shut down all funds except its flagship after posting losses of 4.5% through April, with its Enhanced fund down 12% through May, signaling that some next-generation managers could not sustain operations during market volatility.
- • Tiger Cubs suffered concentrated losses in speculative growth and tech stocks, with managers forced to abandon long-time holdings in positions like JD.com and Netflix as sector-wide selling pressure intensified across their core holdings.
- • Investor inflows to Tiger Cub funds have slowed materially as clients reassess conviction in managers who underperformed despite establishing track records built on long-term, fundamental investing approaches.
- • Julian Robertson's proposed seeding fund or fund-of-hedge-funds initiative faces headwinds, as the flagship Tiger Cubs—including the most prominent and largest vehicles—struggled in what proved to be a volatile year for long-short equity strategies.
Summary
The next generation of Tiger Management alumni faced a punishing quarter and extended period of underperformance, with several prominent Tiger Cubs posting double-digit losses and scaling back operations amid market volatility concentrated in growth and technology equities. According to Institutional Investor, the downturn caught many of the industry's most celebrated managers off-guard, as funds typically designed to perform across market cycles instead stumbled on a shared portfolio thesis centered on speculative tech and large-cap growth stocks.
Andreas Halvorsen's Viking Capital and Lee Ainslie's Maverick Capital—two of the most recognizable Tiger Cub brands—posted year-to-date losses of approximately 4.7% and 3.3% respectively through mid-2015, placing them among the worst-performing hedge funds in an otherwise volatile landscape for institutional investors. Stephen Mandel's long-short platform also underperformed, with Lone Cypress down 3.6% and his long-only vehicle Lone Cascade declining 4.6%, driven primarily by losses in short positions concentrated in economically sensitive stocks. Mandel, who typically maintains 40-60% net long exposure, saw his long portfolio perform relatively well on a relative basis but was significantly hurt by the short book.
The strain proved unbearable for some managers. Steven Shapiro's Intrepid Capital Management, whose founder spent four years covering technology stocks for Tiger Management, began the year with an overtly bullish stance on tech and large-cap equities. The fund declined approximately 4.5% through April, leading Shapiro to shutter all vehicles except the flagship fund. A smaller fund, Intrepid Enhanced, suffered steeper damage, falling 12% through May.
The confluence of losses has created challenges for Julian Robertson's broader strategy of seeding and developing next-generation managers. Robertson built Tiger Management into a $22 billion empire generating returns exceeding 30% annually before its 1998 closure, establishing himself as the industry's premier talent incubator. Today, Tiger Cubs manage approximately 50 of the world's top hedge funds, yet Robertson's reported consideration of launching a dedicated seeding fund or fund-of-hedge-funds for outside investors arrives at an inopportune moment, as many of his most prominent proteges face investor skepticism and capital redemptions amid underperformance.
Andreas Halvorsen's Viking Capital and Lee Ainslie's Maverick Capital—two of the most recognizable Tiger Cub brands—posted year-to-date losses of approximately 4.7% and 3.3% respectively through mid-2015, placing them among the worst-performing hedge funds in an otherwise volatile landscape for institutional investors. Stephen Mandel's long-short platform also underperformed, with Lone Cypress down 3.6% and his long-only vehicle Lone Cascade declining 4.6%, driven primarily by losses in short positions concentrated in economically sensitive stocks. Mandel, who typically maintains 40-60% net long exposure, saw his long portfolio perform relatively well on a relative basis but was significantly hurt by the short book.
The strain proved unbearable for some managers. Steven Shapiro's Intrepid Capital Management, whose founder spent four years covering technology stocks for Tiger Management, began the year with an overtly bullish stance on tech and large-cap equities. The fund declined approximately 4.5% through April, leading Shapiro to shutter all vehicles except the flagship fund. A smaller fund, Intrepid Enhanced, suffered steeper damage, falling 12% through May.
The confluence of losses has created challenges for Julian Robertson's broader strategy of seeding and developing next-generation managers. Robertson built Tiger Management into a $22 billion empire generating returns exceeding 30% annually before its 1998 closure, establishing himself as the industry's premier talent incubator. Today, Tiger Cubs manage approximately 50 of the world's top hedge funds, yet Robertson's reported consideration of launching a dedicated seeding fund or fund-of-hedge-funds for outside investors arrives at an inopportune moment, as many of his most prominent proteges face investor skepticism and capital redemptions amid underperformance.
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