So far in 2022 Tiger Global has hit a loss of about $17 billion — more than $2 billion more than the estimate of $15 billion last week. Tiger Capital is one of the largest hedge funds and this years market sell-off is making things go from bad to worse for the hegde fund giant. The NASDAQ composite index of tech stocks has fallen day after day and is down another 9.5% in the last week, making investors wonder if Tiger Global will make it. The $17 billion dollar loss does not include Tiger Global’s investments in private tech startups so it is speculated that Tiger Global is beyond a $17 billion dollar loss as private markets may begin to be affected by the public market sell-off.
While Tiger Global is on the brink of disaster and is making history with the $17 billion in losses, we can imagine that other hedge funds are not far behind. Investors are moving out of big name technology and growth stocks that have been beaten up the most over the last few weeks and are moving into more safe haven sectors like consumer staples and utilities. Tiger Global has been known during the bull market for paying extremely high prices without doing proper due diligence, which is now coming back to haunt the hedge fund giant.
Recently other hedge funds have been experiencing large losses as well, such as Bridgewater Associates who lost $12 billion in 2020 and Melvin Capital who lost $7 billion just last year. We know that the hedge funds have all been struggling but Tiger Global has brought it to a new level. If Tiger Global is this deep in losses, other hedge funds are likely not trailing too far behind. Melvin Capital has been in desperation themselves — as just a few weeks ago CEO Gabe Plotkin wrote to investors announcing he wanted to remove the high water mark that prevents hedge funds from collecting a large performance fee until losses have been recovered. Plotkin’s move comes from the fact that the fund is also experiencing extreme losses of 39% last year and another 21% loss this year.
Retail investors believe that the consistent downwards trends of some of the largest hedge funds indicate that a short squeeze may be on the Horizon for popular meme-stocks like AMC Entertainment and GME. Meme stocks have been heavily shorted since 2020 and it’s only a matter of time before these funds will have to close their short positions.