Hedge Fund Hell: How the Tech Crash Is Clobbering the Tiger Cubs

(Bloomberg) - The hedge fund managers known as Tiger Cubs made billions riding some of the same tech stocks to dizzying heights.

Then, in a blink, years of gains evaporated as the markets turned violently against them in the first quarter. The carnage continued in April and bled into May as some of their top stock picks plunged even more. The tech-heavy Nasdaq 100 has tumbled 23% in 2022.

The Tiger Cubs -- so named because their founders worked under legendary investor Julian Robertson at Tiger Management -- recently reported changes to their US stock holdings as of the end of the first quarter. The firms include Tiger Global Management, Lone Pine Capital, Coatue Management, Maverick Capital, Viking Global Investors and D1 Capital (known as a Tiger Grandcub because it was spun off from Viking).

The following charts illustrate the breadth of the firms’ selling and how some of their remaining investments are faring.

Almost all of them liquidated significantly more positions than the new stakes they took. Tiger Global led the way with 83 exits compared with just two new holdings.

Stick with a sinking stock you believe in or cut the cord? It was a question the Tiger Cubs had to grapple with as equity markets continued their downward spiral. In the first quarter, Tiger Global and Maverick both opted to increase their holdings in online used-car dealer Carvana Co. The shares have plunged 65% so far in the second quarter.

Of the 13 worst-performing stocks held by at least half of the cubs, Tiger Global, Maverick and Coatue either held or boosted stakes in five of them.

For years, Tiger Cubs were known for piling in and out of the same or similar stocks, given that they all had the same mentor.

But the latest data show more divergence. For example, half the group bought Microsoft Corp. shares while the rest sold, and three cut Shopify Inc. or Facebook parent Meta Platforms Inc. while the others added or kept their stakes unchanged.

And if the hedge funds hoped that fresh bets would help change their fortunes in the second quarter, that hasn’t happened. The two biggest new positions taken by each of the firms in the first quarter are all down since March 31.

The worst performer in the group is Tiger Global’s investment in Dave Inc., a provider of digital-banking services that has plummeted 64% in the second quarter, extending its decline for the year to 75%.

By Hema Parmar and Tom Maloney


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