RIP the cult of the Tiger cub


The latest LCH Investments list of the best-performing hedge fund managers of all time is out. As we predicted a few weeks ago there’s a big change at the top. But the real action is further down the list.

After racking up a frankly obscene $16bn net gain in 2022, Ken Griffin’s Citadel has ousted Ray Dalio’s Bridgewater at the top of the table. He may chew through portfolio managers like they rare steaks, but Ken really is the apex predator of finance today.

You can read our colleague Laurence Fletcher’s full account here, and here are the rest of the top 20. Attentive readers will spot something else that has flown a little under the radar (at least ours).

Tiger Global having a terrible, horrible, no good very bad 2022 is pretty much common knowledge by now. After debuting at 14th in 2020 and slipping to 16th in 2021, Chase Coleman has now dropped out of the list altogether after an $18bn aggregate loss from its main hedge fund, long-only and crossover investment vehicles. Tiger declined to comment.

That multi-strategy hedge funds are (along with macro funds) ruling the hedge fund roost is also no surprise. DE Shaw killed it in 2022, and while Citadel’s performance will no doubt grate with Izzy Englander, Millennium had a great one too. Steve Cohen’s Point72 also chalked up a $2.4bn gain.

No, the dramatic fall of Steve Mandel’s Lone Pine is the main shock (at least to us). Perhaps the woes of fellow “Tiger cub” Tiger Global has sucked up so much attention and obscured the terrible performance of Lone Pine, but it caught FTAV a bit by surprise.

It has been quite the fall. At the end of 2020 Lone Pine had climbed to third on the all-time list, leapfrogging the likes of DE Shaw, Millennium, Elliott and Baupost along the way, and pushing Citadel down to fourth.

It seems Griffin must have taken it personally and gotten someone to hex Mandel, because since then it’s only gone one way for Lone Pine, culminating in a $10.9bn loss for 2022, according to LCH’s estimates. This has deflated Lone Pine’s assets under management to about $15bn — less than half of where it was just two years ago — and pushed it down to 11th in LCH’s list of top net gains for investors since inception.

Mandel stepped down from day-to-day management in 2019, leaving David Craver, Kelly Granat and Mala Gaonkar in charge (the latter, who once wrote and produced an interactive play with Talking Heads’ David Byrne, recently left to set up her own shop, SurgoCap Partners).

But the main culprit behind Lone Pine’s fall seems to be a familiar one, rather than succession shenanigans. From this August 2022 Bloomberg story it looks like Lone Pine just did what many other Tiger cubs did and loaded up on growth stocks and has now paid the price. Despite a sterling reputation, was it basically just ARKK with a hedge fund comp structure? Lone Pine declined to comment.

Frankly, while Citadel’s ascent to the top will generate most of the headlines (and cause parts of Reddit to melt down), the 2022 collapse of the Tiger cubs more broadly is pretty incredible.

Andreas Halvorsen’s Viking lost only 2.5 per cent in its main hedge fund — respectable given the equity market turbulence. But given its size and together with losses in its long-only fund that meant LCH listed it with a $3bn of losses for investors in 2022. Meanwhile John Armitage’s Egerton lost $4.1bn, according to LCH.

Outside the top 20 list things weren’t great either. Philippe Lafont’s Coatue lost 19 per cent, and Lee Ainslie’s Maverick Capital dropped 23 per cent. Light Street Capital was down 50 per cent by the end of September, the last update we’ve seen. “Tiger grandcub” D1 lost over 30 per cent,

FT Alphaville’s very rough back of the envelope calculations indicate that this means that the famous Tiger cubs probably lost investors about $60bn last year. To put that in perspective, that means that Tiger cubs accounted for over a quarter of LCH’s estimate for the global hedge fund industry’s overall $208bn loss in 2022.

It’s almost as if having a large web of multibillion-dollar hedge funds that all have the same intellectual pedigree, near-identical investment styles and eerily similar portfolios might make them all look good for a while until disaster strikes?

This feels like a good time to re-up an old meme we first saw AQR’s Clifford Asness share but whose original provenance seems to be @Ebitdad.