One of the world’s largest hedge funds is fighting for survival. Tiger Global Management has lost $42 billion this year — $185 million for every trading day.
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The fund has been stung by bad bets in public tech stocks and startups. From a report in the trade journal PYMNTS:
Tech investor Tiger Global Management has reportedly slashed the value of its private funds by nearly 25% this year, leading to one of the industry’s largest-ever declines in assets at $42 billion.
Meanwhile, some of the companies held by Tiger Global’s venture unit that had been private but have since gone public lost value, sources told Bloomberg.
The unit oversaw around $43 billion as of the end of September, falling from $65 billion at year-end. Assets in the firm’s public investment operation shrank from $35 billion to $15 billion the sources said. Tiger Global was not immediately available for comment.
The real losses may be even bigger. The NASDAQ is down 30% this year, significantly worse than the markdown Tiger has taken on its startup portfolio.
To add insult to injury, Tiger was burned in the bankruptcy of FTX. The fund’s $38 million investment is now worth zero.
For Tiger’s public stock portfolio, the picture is especially bleak. The portfolio is down 57% this year.
This means Tiger’s public stocks would have to more than double just to get back to even. With a weak world economy, this seems unlikely.
I think Tiger’s shutdown is imminent.
The firm cannot charge performance fees until it makes back its losses. That could be years from now, if ever.
That juicy 20% performance fee is the lifeblood of hedge funds. Without it, there are no big year end bonuses.
Let’s face it: people don’t join hedge funds to save the world. They sign up to make money, and lots of it.
With Tiger’s future in doubt, employees are likely to jump ship.
But if the managers create a new fund, they start with a clean slate. They can start charging performance fees again on day one.
Nice for them. Not so nice for their investors.
What do you think the future holds for Tiger? Leave a comment at the bottom and let me know!
More on markets:
Hedge Funds Lose Billions as FTX Implodes
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Photo: Tiger Global CEO Chase Coleman
Tremendous 
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