Key Takeaways
- • Chase Coleman's Tiger Global, the top-ranked hedge fund last year, slipped to #12 in Bloomberg Markets' 2012 rankings with a 21% return, compared to 45% the prior year, reflecting a significant decline in performance among elite Tiger Cubs.
- • Tiger Cubs—hedge fund managers trained and seeded by Julian Robertson's legendary Tiger Management—collectively lost their dominant positions in the top 100 rankings, with performance compression across long/short equity strategies dominating the cohort.
- • Asset-backed and mortgage arbitrage strategies displaced long/short equity funds at the top of the 2012 rankings, signaling a strategic rotation in what drives hedge fund outperformance in the current market environment.
- • Bill Hwang's Tiger Asia, which ranked #25 the previous year, returned capital to outside investors in August 2012 following a three-year insider trading investigation by Hong Kong regulators, removing a significant player from the rankings.
- • Lee Ainslie's Maverick Capital emerged as the highest-ranked remaining Tiger Cub after Coleman, posting a 16% gain during the year.
Summary
Bloomberg Markets' 2012 top 100 hedge fund rankings reveal a dramatic reshuffling of the industry's elite, with the Tiger Cubs cohort experiencing a pronounced decline from prior-year dominance. The Tiger Cubs—a notable cluster of fund managers who received capital and mentorship from Tiger Management founder Julian Robertson—have materially underperformed relative to 2011, reflecting both market headwinds and strategic challenges within the long/short equity category.
Chase Coleman's Tiger Global exemplifies the performance compression within the Tiger Cubs network. As the leading hedge fund manager in 2011 with a 45% return, Coleman ranked #12 in the 2012 standings with a 21% gain. While Tiger Global maintained positive returns, the significant contraction highlights the difficulty of sustaining top-quartile performance across market cycles. Coleman's early-stage technology investments in companies like Facebook and Zynga, which likely drove exceptional 2011 results, faced valuation pressures and lower growth multiples in 2012.
The broader Tiger Cubs cohort experienced similar headwinds. Lee Ainslie's Maverick Capital, which emerged as the highest-ranked Tiger Cub after Coleman, delivered a 16% return—solid by absolute standards but substantially below the prior year's benchmark. Bill Hwang's Tiger Asia, which had ranked #25 in the prior year, exited the competition entirely when it returned capital to outside investors in August 2012, following conclusion of a three-year insider trading investigation by Hong Kong regulators.
A structural shift in top-ranked strategies underscores the performance differential. The 2012 top rankings were predominantly occupied by hedge funds employing asset-backed and mortgage arbitrage strategies, displacing the long/short equity focus that characterized Tiger Cubs performance. This strategic rotation reflects both cyclical market dynamics and the relative valuation environment favoring fixed-income-oriented approaches in 2012, a period marked by accommodative monetary policy and financial system repair.
Chase Coleman's Tiger Global exemplifies the performance compression within the Tiger Cubs network. As the leading hedge fund manager in 2011 with a 45% return, Coleman ranked #12 in the 2012 standings with a 21% gain. While Tiger Global maintained positive returns, the significant contraction highlights the difficulty of sustaining top-quartile performance across market cycles. Coleman's early-stage technology investments in companies like Facebook and Zynga, which likely drove exceptional 2011 results, faced valuation pressures and lower growth multiples in 2012.
The broader Tiger Cubs cohort experienced similar headwinds. Lee Ainslie's Maverick Capital, which emerged as the highest-ranked Tiger Cub after Coleman, delivered a 16% return—solid by absolute standards but substantially below the prior year's benchmark. Bill Hwang's Tiger Asia, which had ranked #25 in the prior year, exited the competition entirely when it returned capital to outside investors in August 2012, following conclusion of a three-year insider trading investigation by Hong Kong regulators.
A structural shift in top-ranked strategies underscores the performance differential. The 2012 top rankings were predominantly occupied by hedge funds employing asset-backed and mortgage arbitrage strategies, displacing the long/short equity focus that characterized Tiger Cubs performance. This strategic rotation reflects both cyclical market dynamics and the relative valuation environment favoring fixed-income-oriented approaches in 2012, a period marked by accommodative monetary policy and financial system repair.
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