- Tiger Global has $30 billion in assets under management.
- Almost half of its public investments are in the tech sector.
- Since last year’s third quarter, it has nearly doubled its stake in one tech company.
Tiger Global Management is one of the most successful modern-day hedge funds.
The firm has $30 billion in assets under management. And it has only lost money twice over the past dozen years: 2007 and 2016.
Believe it or not, the S&P 500 Index can say the same (2008 and 2018). But its returns were weak compared to Tiger Global’s.
If you’d invested $100 in the S&P 500 at the start of 2007, it would have been worth $252 on May 31, 2019.
By contrast, the same investment in Tiger Global would have grown to nearly $600 by the end of May.
Tiger’s returns have also outgained the broader hedge fund industry.
This fund has been so successful during its nearly two decades of existence that it makes sense to watch what it’s doing.
It’s true that past performance may not predict future results. But who would you prefer to invest with — someone who’s had success before, or someone who hasn’t?
How Does This Happen?
There are many reasons for Tiger Global’s success.
It’s run by Chase Coleman. Coleman grew up in the investment business. His friend’s dad was Julian Robertson, the “Father of Hedge Funds.”
Robertson founded his fund, Tiger Management, in 1980. He then proceeded to turn $8 million into a reported $22 billion.
Coleman worked as an analyst for Robertson for four years. Then, when Coleman was 25, Robertson invested $25 million in Coleman’s new fund. And Tiger Global was born.
Coleman and several of his peers are known as “Tiger Cubs.” They are proteges of Robertson’s who started their own firms. Many of them have seen success.
Coleman enjoyed an aristocratic upbringing and solid education. That may have helped him recognize the importance of private equity before many of his peers. In fact, Tiger Global describes itself as a firm with a hedge fund and a private investment vehicle.
A Solid Track Record
When you invest in companies before they go public, you can realize greater returns. You get to enjoy the early growth of the firms as well.
But you have to know what you’re doing … and have a team that can sift through lots of prospectuses to find the ones with the most promise.
Along these lines, Tiger Global is a big fan of technology.
Coleman is known as someone who can assess which new tech will be at the forefront of the next growth cycle.
Today, nearly half of Tiger Global’s public investments are in the tech sector. And the overall percentage is even greater.
The fund owns big stakes in tech majors, such as $1 trillion in Microsoft.
But it owns smaller firms, such as $782 million lifestyle improver Fitbit, too.
Tiger Global has generated serious returns by buying up-and-coming names no matter where they’re based. Its $200 million bet on Chinese e-commerce giant JD.com in 2009 produced profits of $5 billion.
The firm is aggressive … but intelligently so.
Sorting Through the Portfolio
One Tiger Global holding has taken a hit recently.
Facebook Inc. (Nasdaq: FB) is down 13% over the past month. In July, it moved above $200 per share for the first time in a year. Since then, shares have fallen amidst the global angst.
But its numbers don’t warrant the move. Today, Facebook’s cash balance, revenue and free cash flow are greater than ever.
The company’s in the news a lot, but thus far nothing can stop its operational growth.
Tiger Global has owned shares of Facebook for several years. But it really likes it today.
Since last year’s third quarter, the fund has nearly doubled its Facebook stake to almost 9 million shares worth $1.6 billion.
Facebook’s price-to-free-cash-flow (P/FCF) ratio is 28. That’s reasonable for a company that’s growing so fast.
From its 2012 initial public offering to March 2018, Bloomberg shows Facebook’s P/FCF ratio was only this low on a single trading day. One.
And shares haven’t been so cheap on this basis since January.
I suggest you look into Facebook stock. I know the market is volatile today. But absent a sustained global market panic, I doubt Facebook shares will be this cheap a year from now.
And overall, remember: Tiger Global has outperformed its peers and the rest of the market. Its focus on technology is a big reason why.
You need to have some exposure to it in your portfolio.
Editor, Insider Profit Trader
P.S. In his Sovereign Investor Daily article for Thursday, my colleague Ian King wrote that tech companies such as Facebook “are mining data from our phones, PCs, cars and even our refrigerators. They’re slicing and dicing it, and using it to provide consumers a better real-world experience.” Ian has identified the one company in particular that’s at the center of this Big Data revolution, and it’s going to be a huge winner over the next 10 years. To watch Ian’s brand-new video about the era of Big Data, simply click here now.