Last week, when news broke that Archegos Capital's Bill Hwang was arrested for massive, multi-billion market manipulation, we joked that the infamous Tiger Cubs - the echo chamber of groupthinking hedge funds spawned by Julian Robertson - was calling Bill Hwang to find out who his travel agent is...
Tiger cubs calling Bill Hwang to find out who his travel agent is
-- zerohedge (@zerohedge) April 29, 2022
... because once their LPs got whiff of their underperformance for 2022, it would get from bad to disastrous for the so-called "smart money."
They (and we) didn't have long to wait, because this morning Bloomberg reported that the latest scorecard for the biggest "tiger" of all, Tiger Global, had performed just as badly as expected, suffering a catastrophic plunge in April when it dropped another 15%, bringing its loss in 2022 to 44%. Tiger Global's long-only fund was hit even worse, tumbling 25% last month and extending its drop for the year to 52%. Yes, one of the world's most respected "hedge funds" has lost more than half of its value in 4 months!
A spokeswoman for the firm, which managed $35 billion across its hedge, long-only and crossover funds at the end of last year and now manages much, much less, declined to respond to Bloomberg requests for comment.
Tiger Global, founded ironically in 2001 in the depths of the post dot-com bubble, is heading for its worst year ever and is driven by the record crash in fast-growing tech companies which have driven the firm's gains, and which are coming down now faster than they went up. In April, the Nasdaq 100 fell 13%, its biggest monthly slump since 2008.
Chase Coleman's firm, riding on the back of the Fed's relentlessly growing balance sheet, had long been one of the hedge fund world's "best performers" although it now appears that it was all just a function of Fed liquidity and very little talent.
Tiger Global's long-only fund was hit even worse, tumbling 25% last month and extending its drop for the year to 52%: BBG An entire generation of traders has no idea what to do when Fed isn't bailing their ass out
-- zerohedge (@zerohedge) May 3, 2022
Through 2020, Tiger Global's annualized returns at the hedge fund were more than 20%, with just two down years. But last year's 7% decline has been followed by this year's losses, performance which prompted an unusual note of contrition in an investor letter last month.
"In this moment, we are humbled, but steady in our conviction and confident about the go-forward opportunity," the firm wrote after revealing a 34% drop in the first quarter. "We are reassessing and refining our models using all the inputs available to us."
Blah blah blah. Here is all you need to know to explain Tiger's rise and fall.
Another way of putting it comes from fellow billionaire Mike Novogratz who tweeted that Tiger Global has a long way to go before it hits its high water market.:
Tiger Global needs to make 79% to get back to HWM. That's the bitch about losses. Lose 44 percent and its 79 back to flat. The Calvary isn't coming this time either. It's a tough year. We will see many restructurings.
-- Mike Novogratz (@novogratz) May 3, 2022
And speaking of "fall" - and fail - and unreachable high water marks, it will come as no surprise that as Tiger was crashing, so was Gabe Plotkin's Melvin Capital, and according to the NY Post, the fund which has become a joke among Wall Street traders, lost another 3.3% in April, taking the fund's year to date drop to 23.3%.
Melvin's continued implosion comes just as Plotkin suggested two weeks ago he would return investors their capital at the end of June and then allow them to reinvest in the beginning of July. As we reported then, Plotkin said he would try to scrap his fund's high water market and instead of making investors whole, would demand performance fees of potential clients, including those who previously lost money with him. According to reports, Plotkin said he would keep the new fund small -- under $5 billion and focus on shorting stocks.
"Melvin's CEO who made $800 million in 2020 lost me even more money in April and wants to make himself more fees?" one investor told the NY Post. "Shameful, disgusting, horrible behavior."
Melvin was down 21% in the first quarter, but investors told The Post they were hopeful Plotkin would turn it around. The email to investors that Plotkin's most recent bets pushed the hedge fund even deeper into the hole was met with anger.
"These people suck," the investor said, slamming Melvin.
After speaking to investor, Plotkin said he realized his suggestion to shut down Melvin was "tone deaf" and wrote that he was sorry: "I got this one wrong. I made a mistake. I apologize."
Of course, as the Post notes, his lifestyle is unaffected by his recent losses, and the Steve Cohen protege is still holding onto the beachfront home he bought in 2020.
"Plotkin should sell his $44 million Miami Beach home after losing all of us so much money… rather than charging us more fees," the investor fumed.