A hedge fund backed by legendary investor Julian Robertson has shut its doors after nearly 13 years of trading in the latest sign of the tough conditions for managers trying to bet on the rise and fall of stock prices.
New York-based Tiger Legatus Capital Management, founded by former Viking Global Investors trader Jesse Ro, told investors in a letter seen by the Financial Times that it would liquidate its fund and return capital after recent disappointing returns.
While it had lost money since the start of last year, its recent performance has held up relatively well compared with some other “Tiger cubs” and “grandcubs” that trace their origins back to Julian Robertson’s hedge fund Tiger Management.
Robertson, an 89-year-old billionaire who has retired from the markets, has been one of the most influential hedge fund managers. He carved out a reputation for his firm Tiger Management, which ran one of the most prominent hedge funds from launch in 1980 until the fund returned investor capital in 2000.
The closure of Tiger Legatus comes as equity hedge funds suffer their worst start to a calendar year on record, with many struggling to adjust to a dramatic change in market conditions.
Such funds on average lost 8 per cent in the first five months of this year, more than the opening months of 2020 during the onset of the coronavirus pandemic, according to HFR, whose data goes back to 1990.
A number of managers have been hit by a sharp sell-off in many of the high-growth technology stocks that led the bull market of recent years and have been badly burnt as central banks start to raise interest rates to try to rein in inflation.
“We have not delivered acceptable returns over recent years,” Ro wrote in the investor letter.
He added that the fund structure and declining assets under management “do not provide the duration of capital necessary to successfully continue our investment strategy without compromising returns”.
Ro’s fund was down 2.8 per cent in the first quarter of this year, during which time the S&P 500 index lost 5 per cent, and fell 1 per cent last year, according to a person familiar with the returns. The fund has, however, more than doubled investors’ money since launch, according to the letter.
In comparison, Tiger Global, the most famous Tiger cub, lost 34 per cent in the first quarter of this year and is now down 52 per cent. Fellow cub Lee Ainslie’s Maverick Capital has lost more than 34 per cent.
Tiger Legatus recently held stocks including private equity firm Apollo Global Management and ride-hailing firm Uber Technologies, which fell during the first quarter, according to regulatory filings.
The fund, which at its peak managed about $500mn in assets, has been backed by Robertson. In the letter, Ro thanked Robertson and his son Alex “for their unwavering support and wisdom throughout the years”.
The fund said it had started taking steps to wind down the fund and expected to have completed the liquidation by the end of September.
The Tiger Legatus fund and Ro declined to comment.
