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Julian Robertson takes a deceptively simple approach to investing: own the best companies and short the worst. To be successful in the investing world means that you are right in more situations than you are wrong. For most of Robertson’s time running Tiger Management, the hedge fund firm he founded in 1980, he was right.
Robertson, who has died at the age of 90, was an investment titan who nurtured a dynasty of hedge fund managers known as the Tiger cubs.
Born in North Carolina in 1932, Robertson served as an officer in the U.S. Navy after college. In 1957, he joined Kidder, Peabody & Co., an American securities firm, as a sales trainee. There, he befriended the son-in-law of Alfred Winslow Jones, the father of hedge funds. This will set the stage for Tiger’s investment approach.
In 1978, Robertson moved to New Zealand with the intention of writing a novel, but soon returned to New York. At the age of 48, he co-founded Tiger, a name derived from his fondness for calling people “Tiger” when he couldn’t remember their names. The company started with $8 million in capital and grew to more than $21 billion at its peak. Over a 20-year period, the fund has averaged more than 25% annual returns and has outperformed the S&P 500 in 14 years.
Slender, sociable, dressed in a tailored suit from London’s Savile Row, Robertson speaks with Carolina’s sluggish slobber, casually betraying his sharp wit. Sebastian Mallaby wrote in his book “More Money Than God,” “He had Southern charm, New York connections. He was a man. The man in the man, the athlete in the athlete, he recruits in his own image.”
The typical Tiger analyst is competitive, curious, and outgoing — and male. On Robertson’s team, it was “like being in the SEALs,” recalls Philippe Laffont, a member of the Tigers who later founded Coatue Management. Every morning at exactly 6 a.m., Robertson calls the trading desk to check on performance. Analysts are interrogated about investments, and their bosses can lash out at a wrong decimal place or a wrong number. Robertson would invite traders to a cycling event at the gym, then take them outdoors in Idaho’s Sawtooth Mountains on his private jet. One visitor recalled that Tiger’s female assistants “looked like supermodels.”
Robertson loves to learn from young people. He was not familiar with the credit default swap market until a few years before the financial crisis, one of his analysts told him. He decided to trade CDS and made triple-digit returns in 2007-2008.
Tiger’s simplistic approach to investing belies his forensically detailed analysis of the company and its management. Robertson may be short-tempered, but the strength of his personality has helped build a diverse investor base that includes singer Paul Simon, writer Tom Wolfe and Blackstone founder Schwarzman. Steve Schwarzman). In 1998 he even persuaded former British prime minister Margaret Thatcher to join the advisory board.
Short-seller Jim Chanos recalls managing a short portfolio for Tiger in the 1990s, when he was often summoned to the firm’s headquarters at 101 Park Avenue to defend his ideas. After his first lunch, Robertson took Chanos to the elevator. “That’s great, Jim, thank you for coming,” he said, “plus, please cover that short position” – i.e. closing the investment.
Tiger’s legacy is the success of Robertson’s disciples – including Lafont, Chase Coleman, John Griffin, Lee Ainsley, Steve Mandel and Andreas Ha Walter Watson – just like his own record. There are nearly 200 hedge fund firms whose origins can be traced back to Tiger Management, including Bill Hwang’s Archegos Capital Management, which has been liquidated in 2021.
Robertson, who is alive with three sons and nine grandchildren, has given more than $2 billion to charities and was one of the early signatories of the Giving Pledge. Warren Buffett, co-founder of The Giving Pledge, told the Financial Times: “When Julian got a charitable referral from someone he trusted, he immediately wrote a cheque that Always a lot of ‘zeros’ written. He never wanted a word of approval or thanks.”
As Tiger has grown, the company has expanded from its core expertise in U.S. equities into government bonds, commodities and foreign exchange. Some of the drivers of Robertson’s success — big bets with strong conviction — ultimately led to his downfall. Huge bets against the yen and a large position in USAir have proven painful, while he refuses to embrace the dot-com boom — which, he says, “unwittingly created a doomed crash.” The Ponzi Pyramid” – cost the fund a fifth of its value in 1999.
Robertson’s predictions about the dot-com bubble turned out to be correct. But it was too late for Tiger. The hedge fund finally returned money from outside investors in 2000, after losses and declining assets. Its charismatic founder is living proof that in the stock market, being early is wrong.