(Bloomberg) Hedge fund managers known as Tiger Cubs are facing serious carnage in the market.
The alliance consists of Tiger Global Management, Lone Pine Capital, Coatue Management, Maverick Capital, Viking Global Investors and D1 Capital
Billions were made in tech stocks, but gains have now evaporated.
Tech stocks have fallen the first quarter of 2022 and have bled into the second quarter this year.
Is it possible the Tiger Cubs are the next hedge fund managers to join Melvin Capital’s grand exit?
Let’s discuss it.
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NASDAQ plummets in 2022
The tech-heavy NASDAQ 100 has fallen more than 29% this year.
It’s down more than 11% from the S&P 500 (down 18.47% YTD).
According to Bloomberg, majority of the Tiger Cubs stock picks are in tech stocks.
Tiger Global exited 83 positions depicted in the chart below and entered only 2 new positions.
The hedge fund sank 34% the first quarter of 2022.
Coatue Management is another hedge fund who has been struggling to keep its doors open this year.
Last year investors demanded to pull out $250 million from the hedge fund but Coatue was unable to meet demands.
Coatue said the money they could not deliver to their clients was being held in private companies, making it difficult to liquidate.
Today we see Coatue Management exited 35 stocks and only entered 12 so far.
The rest of the cubs aren’t doing so well with everyone exiting more positions than entering them.
Tiger Cubs cut their losses
Below you’ll find a chart showing the worst-performing stocks widely held by the Tiger Cubs.
Big name companies include Carvana, DoorDash, Netflix, and Shopify to name a few.
The Tiger Cubs have been known for piling into the same or similar stocks since they all had the same mentor.
These hedge funds are facing significant losses despite being in it together.
Melvin Capital saw a 50% loss in 2021 and another 20.6% during the first quarter of 2022 before throwing in the towel.
The hedge fund was destroyed by retail investors when it decided to bet against game retailer GameStop and other ‘meme stocks’.
Ken Griffin defended Gabe Plotkin’s Melvin Capital in a Bloomberg exclusive attacking retail investors.
The Citadel founders said retail investors wiped out teacher’s pension plans by bankrupting Melvin Capital.
And the retail community is biting back, speaking the truth.
CALPERS, the largest pension fund in America loaded up on AMC and GameStop and sold Netflix, though.
Ray Dalio’s Bridgewater sold Tesla this Q1 and bought AMC stock for the first time and increased their stake in GameStop.
These are two examples where conventional wisdom doesn’t always make sense (i.e., investing in fundamental tech stocks).
And we can see hedge funds who do follow this ‘conventional wisdom’ are suffering because of it.
Which hedge fund will be next to fall?
Some of you said on Twitter Tiger Global could be the next hedge fund to fall.
Coatue Management has been in deep waters too.
I’m curious to know what you think about where hedge funds are currently headed.
Leave your thoughts in the comment section of the blog below.