The stock market sell off earlier this year has caused hedge funds some damaging losses thus far. Hedge funds overall have been down month after month as we’ve seen tech companies and other high growth stocks take a hit with the start of the Russian-Ukraine War and overall global turmoil.
Tiger Global Management is yet another hedge fund that has seen drastic losses this last month (down 14.8% this past month). Similarly hedge fund counterparts like Light Street Capital Management is down 15% the last month, Melvin Capital was down 15% , and Whale Rock Capital is down 15.9%. Tiger Global, like the rest of the firms, is frantically treading water.
Tiger Global is an investment firm focused on companies in the software, global internet and financial technology industries and In the first quarter year we witnessed Tiger Global to be down 34%. This could be just the start of a downward spiral for the hedge fund that has an estimated $65 billion in total assets under management. While we know short positions have caused chaos for many firms, the market sell offs have caused even more concern for the elite hedge funds.
Tiger Global’s losses are surprising to the industry. The company was founded in 2001 by Chase Coleman and has seen great success ever since the beginning. In fact, Coleman is considered one of the best hedge fund managers in the industry and was mentored by hedge fund icon Julian Robertson. However things have taken a slow turn and the company seems to be headed in a downward spiral. By the end of 2021, Tiger Global was down 7% and the company continues to see declines in the first three months of this year as well. The hedge fund mentions that the stock declines in their focus areas have been steeper and faster declines than anything prior and that the declines are seeming to last longer as well.
While Tiger Global has struggled with their largest stock holdings, they’ve had some success with their short positions generating gains — however they noted that the short gains have not kept the pace of the declines they’re seeing in the longs.
Hedge funds historically have great success with shorting stocks. However within the past year we’ve seen even some of the largest firms take some significant losses due to betting on the wrong stocks. Hedge Funds like Gabriel Plotkin’s Melvin Capital got caught in the line of fire when the online frenzy of meme stocks took off in 2021. Between the twitter and reddit communities for GME and AMC, the retail investors forced many hedge funds to close their short positions at record losses. The short positions ultimately caused billions of dollars worth of losses for many hedge funds.
As turmoil continues globally and the economic outlook remains uncertain with commodities increasing in cost and inflation at all time highs hedge funds are in for a ride. With all this to balance on top of the constant probes by the DOJ and SEC for suspicious trading activity, it’s hard to say how the remainder of the year will pan out for the elite hedge funds — only time will tell!