Previously, Robertson's investment management was extremely successful. As early as 1986, the media widely publicized the high returns of hedge funds, especially the "macro" investment of Tiger Fund 1985. After the strong appreciation of the US dollar for four consecutive years, Tiger Fund expects that the overvaluation of the US dollar against European currencies and Japanese yen will depreciate, and it will buy a large number of foreign currency call options, thus obtaining high returns. In the early days of tiger management, traditional stock selection was an investment strategy. In the middle and late 1980s, with the financial innovation and the introduction of more and more financial derivatives, Tiger Management increasingly deviated from the traditional fund management strategy, and established a derivative portfolio including national debt, currency, stock market, interest rate and related option futures around the world, becoming a typical "macro" hedge fund. Tiger management has always maintained brilliant achievements. From 1980 to1August 1998 before the investment failure, the annual return on investment was 32%, and even counting the 18 months of investment failure, its annual growth rate was as high as 25%, making it one of the best hedge funds. However, after August 1998, the investment managed by Tiger hit a wall everywhere and the asset value plummeted. In the heyday of 65438+1August, 1998, the assets under management amounted to $22 billion, much higher than Soros Quantum Fund. It was the largest hedge fund at that time, so Robertson was promoted to the most influential figure on Wall Street. After a series of investment mistakes, by the end of February 2000, Tiger's assets had plummeted, leaving only more than $6 billion. 1998 since the fourth quarter, investors have successively redeemed their investments in hedge funds under the shadow of the long-term capital management (LTCM) incident. Tiger Management is one of the major hedge funds facing a large number of redemptions, with a total redemption of nearly $7.7 billion.
The decline of tiger management can be traced. First, in the autumn of 1998, due to the devaluation of the Russian ruble, it lost $600 million. Compared with other hedge funds such as LTCM, its losses are not great, especially the Tiger Fund is in its heyday, with losses of hundreds of millions of dollars and limited impact. Secondly, engage in yen speculation, that is, borrow low-interest yen to buy dollar assets, in order to profit from the turmoil in Asian financial markets; However, contrary to expectations, the yen suddenly strengthened in the fourth quarter of 1998, disrupting the deployment of hedge funds to invest in yen, and tiger management eroded billions of dollars. Since then, investors began to redeem their funds, which greatly damaged their vitality. Yen speculation and ruble debt losses are not fatal to Tiger Fund with US$ 22 billion, although this is its first performance retrogression since 18. The performance of 1998 is 4% lower than that of 1997. The real reason for the decline of tiger management is its stock investment mistakes. Like many hedge funds, Tiger Management turned to the stock market after the global "macro" investment failed one after another. When investing in stocks, Robertson has been adhering to the concept of "value investment", determining reasonable prices according to the company's profitability, absorbing on dips and shipping at high prices.
However, when the financial market entered 1999, there was a whirlwind of technology stocks. In the "new economy" dominated by science and technology stocks, the stock fluctuation is not completely operated according to the basic analysis mode, and the "value method" can hardly be used for the analysis of science and technology stocks. Robertson bought a large number of "old economy" stocks at low prices, and these stocks continued to plummet due to the inflow of market funds into "new economy" stocks. For example, American Airlines, which holds more than 22% of the shares, lost nearly 50% of its market value in the past 12 months, and suffered heavy losses in tiger management. The assets per share of Tiger Fund dropped from the highest peak of1540,000 USD to 820,000 USD at the end of February, a decrease of 47%.
Tiger Management, as a hedge fund, uses leverage to buy short-selling stocks and short-selling stocks. It is natural for Robertson to short the unprofitable technology network stocks. He has short-sold two active stock, LucentTech and MicronTech. You can imagine what a huge disaster these transactions have brought to Tiger.
Since then, forced by the situation, Tiger Management has started to catch up with 1999' s "new economy" stocks that have gone out of fashion in the fourth quarter, and has absorbed Intel and Dell Computer successively. And took over the high-level distribution, leading to "buy high and sell low" and lost another hand in technology stocks.
Due to repeated mistakes in stock market investment decisions, the assets managed by Tiger fell by 19% in199, and by the end of February 2000, it fell by 13%. In addition, investors have redeemed their capital. Since1September 1998, the value of assets managed by Tiger has plummeted1600 million USD. Due to serious losses, the assets managed by Tiger have been unable to provide enough commissions and share profits to pay operating expenses and employees' salaries. Unlike mutual funds, hedge funds are paid from management fees, but 20% of the profits realized by the fund are paid. The customers managed by Tiger are either rich or expensive. They are willing to pay a high price to encourage the fund to outperform the market, but only pay the commission to the fund when the investment income must exceed a certain level. In the case that Tiger manages losses, in order to get the commission, the return rate of the fund must rebound by nearly 50%, but this is almost impossible, and the fund is constantly redeemed, so that even the final management fee is not enough to cover the general operating expenses. Julian Robertson, a famous American investor, announced that he would close all six funds of Tiger Management Company, which has been operating for 20 years.
Robertson, a stockbroker, founded Tiger Management Company on 1980. Robertson started with his own $2 million and the $6 million invested by others, and created impressive achievements in the hedge fund industry that few people can match. Tiger's average annual return on investment in the past 20 years has reached 27%. By 1998, the assets managed by Tiger Company had reached more than $2 10 billion, and Robertson himself earned about $110.5 billion.
However, due to the lax supervision of hedge funds by the US government, such funds are much more speculative than mutual funds, so they are more risky. 1In September, 1998, another famous hedge fund in the United States, Long-term Capital Management Company, was on the verge of bankruptcy due to speculative failure, which triggered violent turmoil in the American stock market. 14 wall street financial institutions injected $3.6 billion into long-term capital management company, which finally saved the company from danger. Robertson's bad luck also began with the Russian financial crisis. Due to Russia's default on its foreign debt, the speculation on the yen exchange rate failed. In 1998, Tiger Company/KLOC-0 lost $6,543.806 billion and its assets shrank by 4%. 1999, loss of Tiger Company 19%, loss in the first quarter of 2000 13.5%. But this time, not only did no one lend Robertson a helping hand, but the investors put all their eggs in one basket and withdrew $7.7 billion, which gave the tiger the most fatal blow. Although the closure of Tiger Company is related to bad luck, the deeper reason lies in Robertson's stubborn business philosophy and arbitrary management style. It is precisely because of the great success in these years that Robertson has strengthened his investment philosophy, that is, focusing on investing in "value stocks" belonging to the traditional economic sector and avoiding unprofitable high-tech stocks with soaring prices. Regrettably, in the past two years, most of the "value stocks" invested by Tiger Company have fallen sharply. For example, the share price of American Airlines, in which Tiger holds nearly 25%, has dropped from $80 per share in April 1998 to $25 at present.
In terms of management, Robertson intervenes in almost everything and only believes in his own investment strategy. For example, after the stock of American Airlines began to fall, Robertson not only failed to get out in time, but continued to increase investment, so that he finally failed to get out. Therefore, in recent years, some of the best managers of Tiger Company have left their jobs and started new businesses. Charles Gradant, chief strategist of Hennessy Group, believes that the large scale is also one of the problems of Tiger Company. He believes that when the scale of hedge funds continues to expand, especially after the assets exceed $654.38+000 billion, the functions of hedge funds will gradually deteriorate. Although Tigers are about to close down, Robertson, who was 67 years old in 2000, did not give up. In an interview with reporters, he said: "I will not surrender, and I will not stop investing." He still believes that his investment strategy is correct, and that the current frenzy of technology stocks, internet stocks and telecom stocks will collapse one day. However, Wen, a hedge fund analyst, commented: "There is a saying, don't go against the market. Julian did this and he lost. "