Things seem to be going from bad to worse at hedge fund giant Tiger Global. Its losses for 2022 are up to $17 billion, according to a new Financial Times report:
Tiger Global has been hit by losses of about $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history.
The run of poor performance means the firm — one of the world’s biggest hedge funds and a big investor in high-growth, speculative companies whose shares have tumbled since their pandemic peaks — has in four months erased about two-thirds of its gains since its launch in 2001, according to calculations by LCH Investments.
Less than a week ago, the Financial Times estimated the losses at closer to $15 billion. But the NASDAQ Composite index of tech stocks has fallen another 9.5% since then.
Tiger’s losses may be the largest in the history of hedge funds. Bridgewater Associates lost $12 billion in 2020, and Melvin Capital took a $7 billion hit last year as meme stocks soared.
But Tiger’s losses dwarf those, and also far surpass some of the most famous hedge fund flameouts ever.
Long Term Capital Management made international headlines and required a bailout when its Nobel Laureate traders lost just $4 billion.
I suspect Tiger’s losses may be even worse than they look. As the Financial Times notes, the $17 billion figure doesn’t include Tiger’s investments in private tech startups.
Tiger was one of the biggest investors in large, late-stage private tech companies. It helped to drive those valuations up 653% since 2018.
Now, the problems in the public markets are beginning to affect private markets as well. Late stage valuations have begun to drop.
Given that the Nasdaq is down over 25% since November, they may have a very long way to fall.
During the bull market, Tiger was well known for doing little or no due diligence and paying extremely high prices. Indeed, its tactics forced other venture firms to shorten their diligence process and pay more.
Now, markets are sinking and easy funding is drying up. Tiger may be stung by its lack of diligence and willingness to bid aggressively as some major startups fail.
Where do the difficult market conditions leave Tiger Global?
So far, there have been no reports of massive margin calls or investor redemptions. But I expect to see a run on the fund’s remaining capital at any moment.
What do you think will happen to Tiger Global and other major hedge funds? Leave a comment at the bottom and let me know.
More on markets:
Photo: Tiger Global CEO Chase Coleman
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