Billionaire Julian Robertson dies at 90 – Contrarian investments guided his pioneering hedge fund

Julian Robertson, who built one of the most successful hedge funds of the late 20th century and later seeded many of his protégés’ firms, died Tuesday at age 90 of a heart attack.

Behind the style of “controlled aggression”. Forbes As the 1990s story recounts, Robertson’s Tiger Management teamed up with friends like George Soros and Michael Steinhardt for years finding undervalued small-cap stocks, “forgotten markets” and short-selling industries where Robertson was weak, often by bucking conventional wisdom. His Tiger Management returned 32% annually from its inception from 1980 to 1998, and assets peaked at $22 billion before a short bet against the Japanese yen went wrong.

Robertson closed the firm in 2000 and seeded some of today’s most notable and successful hedge funds known as Tiger Cubs, including Chase Coleman’s Tiger Global, Philippe Lafont’s Couture Management and Stephen Mandel’s Lone Pine Capital. Forbes His net worth was recently estimated at $4.7 billion. He first appeared on our Forbes 400 Richest Americans list in 1997.

“Hedge funds are the antithesis of baseball,” Robertson said Forbes In 2013. “In baseball you can hit 40 home runs on a single-a-league team and never get paid a thing. But in a hedge fund you get paid on your batting average. So you go to the worst league you can find, where there’s the least competition.”

In addition to his wealthy clients, which over the years included author Tom Wolfe and singer Paul Simon, Robertson’s Tiger Management spawned at least six billionaire hedge fund managers. A notable Tiger alum, Bill Huang, amassed a $35 billion fortune at Archagos Capital Management before collapsing within days in 2021. He now faces charges on 11 counts related to market manipulation.

Starting a hedge fund was a second career for Robertson, a native of Salisbury, North Carolina who graduated from the University of North Carolina at Chapel Hill. He spent two years in the Navy and then 21 years at former white-shoe investment bank Kidder Peabody, starting as a stockbroker and becoming president of its investment subsidiary. In 1978, he took his wife and two young children to New Zealand during a year-long sabbatical, where he wrote an autobiographical novel he never published about a young Southern man in New York City.

“I think I write well, but I learned that year that I’m not a novelist by any stretch of the imagination,” Robertson said. Forbes In 2012, however, he maintained a lifelong affection for New Zealand and operated several resorts and golf courses there.

Back in the United States and rejuvenated, Robertson gave up the administrative jobs and dwindling commissions of stockbroking and, at the age of 48, tried his hand at a new firm called a hedge fund. He and his partner Thorpe McKenzie started Tiger Management in 1980 with $8.8 million, including $1.5 million that essentially constituted their own available capital.

“I like to compete — against the market and against other people,” Robertson said Forbes During Tiger’s heyday in 1990.

His success made him one of the wealthiest and most respected minds on Wall Street, although he never drew his South, and he was a generous philanthropist, giving more than $1.5 billion to causes such as medical research and environmental protection. His $24 million gift in 2000 established the Robertson Scholars Program, which provides full rides to students from his alma mater UNC and its neighboring rival Duke and encourages collaboration between the two schools.

In his later years, Robertson said he might choose a different career path if he were old enough.

“People wonder why hedge funds aren’t doing well — I think it’s because of increased competition from other hedge funds,” he said as one of the 100 greatest living business minds. forbes’ 100th anniversary in 2017. “If I’m starting out now, I look at what the competition is like in different areas–and then consider some that aren’t very popular.”

By the 1980s, Robertson’s methods were trail-blazing. Below is the first article Forbes Excerpt from the April 1985 cover story “The Short-Sellers: On What Meat They Feed,” published in Robertson. This was a time when stock portfolios with both long and short positions and performance fees of 20% were both novel and controversial.

Tiger purring

By Matt Shiffrin

hEdge fund manager Julian Robertson hates cats because they kill birds but dogs are something else. “I love dogs,” says Robertson, who runs two hedge funds in New York. For ownership? No, for a short sale.

He means stocks like Tandem Computers, Newpark Resources, Pizza Time Theater and Petro-Louis, which helped him gain 25% in last year’s dismal market.

“There are huge opportunities on the short side,” says Robertson, who, despite his dislike of cats, calls his funds Tigers and Jaguars – his dislike of the cat breed may have been overcome by his appreciation of their potential. He feeds the couple well. Started with $10 million in 1980, Tiger & Jaguar now has $160 million in equity and has delivered an average annual net return of 40% to lucky limited partners like singer Paul Simon and author Tom Wolfe. Not sustainable, perhaps, but everyone’s mouth watering.

A true hedger, Robertson works both sides of the market, short and long. He uses the same technique in both. “Julian is not a gunslinger like other hedge fund guys,” says Elliott Fried, chief investment officer at Sherson Lehman Brothers. “Tiger doesn’t invest and then research.”

Instead, Tiger treats all of its 160 positions — long and short — as long-term investments. (Jaguar, smaller, with mostly foreign partners, is more nimble.) Tiger is still shorting beaten oil service stocks nearly two years later. This generic drug firm is also sitting with huge losses (“two million dollars”) in shorts. “Still stuck,” says Robertson.

Sticking is sometimes being stuck. Robertson admits: “I shorted Dean Witter at 29 in August 1981 because I was bearish on brokerage stocks. Sears took Dean Witter. Tiger had to cover at 48 and lost over $250,000.” Sometimes he is right for the wrong reason. “I went to Babcock & Wilcox once long because I was excited about nuclear power. McDermott came to acquire B&W, and I made a bundle.” He stops and smiles. “Ultimately I was right about Witter and wrong about B&W, but I made money where I was wrong and lost money where I was right. You have to have a sense of humor in this business.”

Robertson’s only other job was with Kidder Peabody — 22 years, first as a broker and later as president of its investment subsidiary, Webster Management. After years of barely beating the market, Robertson left to start Tiger. He analyzed his general results and concluded that he was spending too much time on administrative work and was too limited by institutional constraints. “We didn’t manage the money,” he says. “Now we do it all day, and it’s fun.”

But it’s not all fun and games for Tiger’s team. Robertson expects thorough fundamental analysis in every position. If none of Tiger’s four portfolio managers can handle the work, Tiger hires consultants to help with analysis. On the payroll are a large insurance company executive, a physician and an aviation expert.

Lately, Tiger has been chasing medical technology firms. Robertson admits he’s no medical whiz, so Tiger’s medical consultant, John Nicholson, MD-MBA, helps the firm find potential shorts and longs.

Like other hedge funds, Tiger’s team is paid well when profits come in and when they don’t. Robertson and his three sons have the largest stakes in the partnership, about 13% of the $160 million in equity. Also, his share of profits as a general partner is 20%, about $5 million last year. (If, however, there are a few years in the fund, Robertson’s proceeds from the profits are not paid until the end point is reached.)

Robertson figures that 30% of his 20% stake goes to paying portfolio managers. The rest is gravy. A sliding management fee of about 0.8% of assets pays for overhead and backup staff.

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