As hedge funds have struggled in recent months, other investment areas have made gains. Hedge funds have been plagued by slow performance and concerns over high fees which have driven away investors and billions of dollars in assets. At the same time, private equity funds including Apollo Global, Carlyle Group and others have seen an influx of investments, likely from the same investors who withdrew from hedge fund investments. Now, in a strange reversal, Chase Coleman, the billionaire head of Tiger Global, is making an investment in the publicly-traded shares of one of those private equity leaders. Tiger Global has reportedly built up a significant stake in Apollo Global, the $192 billion-private equity behemoth of billionaires Leon Black, Joshua Harris, and Marc Rowan. Will this strategy pay off for Tiger as hedge funds continue to falter?

Stake Disclosed in March

Tiger Global first disclosed a stake in Apollo Global in the middle of March in 2017, and in just a few weeks the fund has managed to buy up a significant stake in the private equity company. A recent report by Forbes pointed to Tiger's early-April filing with the Securities and Exchange Commission, which indicated a position of close to 24 million class A shares. Those shares are worth about $600 million and account for approximately 6% of all outstanding Class A shares in Apollo, separate from insider interests.

The major position has been paying off for Coleman and Tiger Global, as Apollo has gained 31% so far in 2017. In fact, according to the Forbes report, Tiger's purchases may have helped to launch Apollo to "multi-year stock market highs."

Sudden Sector Shift

The move toward a position in Apollo Global marks a significant departure from Tiger's holdings just a few months ago. In Tiger Global's end-of-year 13F filing, covering holdings for the last quarter of 2016, the fund reported minimal exposure in the financial services sector, including only small positions in Visa (V) and Mastercard (MA). The hedge fund has most recently been known for its positions in e-commerce companies including Alibaba and Amazon. Tiger suffered losses of about 15% in 2016, but so far in 2017 the fund seems to have largely reversed that trend.

Apollo, like other private equity firms, entered into 2017 with stocks priced well below traditional mutual fund-focused companies. Apollo in particular has seen gains thanks in large part to its Athene Holdings (ATH), roughly 40% of its total assets. Apollo is a controlling shareholder in Athene and has about $2 billion worth of the company in its holdings. Athene, which was introduced to the NYSE in December, has gained about 20% in the past four months, helping to boost Apollo as well.

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