The Tiger Cub Hedge Funds Accomplish an Unbroken Streak
The Tiger Cub Hedge Funds have accomplished an unbroken streak, winning considerably more than they've lost. Read our latest to learn more.
About our Data
Everything mentioned in this post is sourced exclusively from public data, including manager profiles, simulated performance and all other analysis and commentary. The data used here omits the short side, non-equity securities, many non-US securities and all non-public information such as actual fund performance.
We have been tracking the performance of the famed Tiger Cubs for years. The so-dubbed Cubs are a hugely successful group of hedge fund managers with ties to legendary investor Julian Robertson and his firm Tiger Management. Many have worked under Robertson and went on to launch their own hedge funds (Tiger Cubs). Others have been seeded by Roberson (Tiger Seeds) and yet others have worked at either a Cub or a Seed fund (Tiger Grand Cubs). Taken together they are some of the most successful and skilled managers on the planet. We revealed some of the secrets to their success in a study titled “Like Tiger Like Cub” released last year.
Tiger Cub Performance
As the AUM that the cubs control sky rockets, it has recently reached a combined $176.7B of disclosed long market value, their performance has more than kept up.
We track a market value weighted portfolio called the Novus Tiger Portfolio (NTP). It resembles a comingled long-only version of an all Tiger Cub fund of funds minus all the layers of fees. The performance has been stellar.
The portfolio has outperformed the markets as tracked above by the S&P 500 handily and has done so with similar volatility and drawdowns. For instance, year-to-date the portfolio returned 8.7% compared to 3.2 for the S&P 500 plus dividends.
Attribution of Tiger Cub Portfolios
The Cubs favor Consumer Discretionary and Information Technology sectors and for good reason.
Those are the very sectors where they have historically added the most Alpha. The below chart shows only the portion of P&L attributable to stock selection within each sector since January 2006. In other words, these are returns of their stocks in each sector adjusted for market and sector volatility. We call this security selection skill, and Tiger Cubs shine in Technology, Healthcare, Consumer Discretionary, all areas of relative overweight. This implies that the cubs know what they are good at and they stick to it.
Of Tiger Cubs, Seeds, and Grand Cubs
The largest of the Tiger progeny are the Tiger Cubs, or those managers that have directly worked for Robertson. They have controlled the lion’s share (Or tiger’s share?) of the assets throughout history and have retained their dominance recently. The three largest Cubs control over 35% of all Tiger affiliated assets. You can explore them and their positions.
Analyzing the managers by pedigree we came upon an interesting finding. Julian Robertson is known to hold regular meetings with his managers to discuss their latest investment ideas. It seems he takes advantage of them very well. Of all the groups, he has the highest batting average (Percent of winning trades over total trades) at 66%.
But it’s the Cubs who seem to really capitalize on their winners and cut their losers just in time. They have a phenomenal Win/Loss ratio, by far the largest of the groups.
In our recent work on Win/Loss and Batting Averages we talk about the importance of these two metrics and explain why the win/loss is the more important of the two for active managers.
Largest Tiger Cub Bets and Wins in 2015
So far this year the most widely bought stock was Allergan, also a favorite for many other hedge funds outside the Tiger family. JD.com and Charter were other large increased bets in the second quarter of this year. On the flip side, many trimmed (or existed) Facebook, Fleetcor and Apple.
So far in 2015 the largest winners for the cubs have been Valeant Pharma, Netflix and JD.com as Alibaba, Micron and Baidu hurt long side returns.
Tiger Cub Overlap
Since the Cubs share a common pedigree, many also share similar investment styles and research processes. Sometimes their research seems to converge on the same theme and even the same stock ideas. We track the similarity for this group of managers in something we call the Tiger Cub Overlap Matrix. This is a free interactive visualization that allows investors to explore trends, buying patterns and pockets of similarity among this great group of managers.
For a quick taste, here are the most popular Tiger Cub positions. In the interactive version you can sort, filter, drill into each manager’s portfolio and view who else holds the same stocks.
Our clients use the Novus Ownership Database to track their own investments and portfolios of other hedge fund managers. Understanding who else owns their stocks is important to our hedge fund clients. And understanding who adds the most diversification benefit is important to our allocators. Contact us to find out who to make ownership data work for you.