The Greatest Investors: Julian Robertson
|Born:||Salisbury, North Carolina, in 1933|
|Most Famous For:||Robertson had the best hedge fund record throughout the 1980s and 1990s. It is reported that the compound rate of return to his investors was 32%. During his active years, he was considered to be the "Wizard of Wall Street." His hedge fund, Tiger Management, became the world\'s largest fund, which peaked at over $23 billion invested. (For related reading, see A Brief History Of The Hedge Fund.)|
He started on his own, founding the investment/hedge fund firm, Tiger Management Group, in 1980. Year after year of brilliant returns turned a reported $8 million investment in 1980 into $7.2 billion in 1996. During the later part of this period, Robertson was the reigning titan of the world's hedge funds. At his peak, no one could best him for sheer stock-picking acumen. Investors, at a required minimum initial investment of $5 million, flocked into his six hedge funds.
In the late 1990s, Robertson agonized over the tech-stock craze and, while avoiding what he considered to be "irrational" investing, the TMG funds missed out on any participation on the big gains of the sector. The gradual demise of Tiger from 1998 to 2000, when all its funds were closed, was reflected in the plunge in assets under management from a high of $23 billion to a closing value of $6 billion.
Poor stock picking and large, misplaced bets on risky market trades are usually cited as the cause of Robertson's downfall. However, it is felt by many objective observers that high-level executive defections from TMG's management, as well as Robertson's autocratic managerial style and notorious temper, eventually took their toll on the firm's performance.
While continuing to manage his own investments, Robertson retired from the hedge fund business. He is active in philanthropy and supporting the resolution of environmental issues.
Realistically speaking, there is very little the average investor can use with regard to Robertson's approach to investing. It was highly personal. In TMG, Robertson would get input from his analysts and make all the investment decisions.
It is said that Robertson was a macro trader, and often rode worldwide trends. He argued against using fundamentals, a position that well might have led to the poor performance and liquidation of his Tiger funds in 2000.
His investment style, about which there is very little written, consisted of a "smart idea, grounded on exhaustive research, followed by a big bet." Not exactly a practical framework that would work for the general investing public.
Robertson's highly individualized approach served him well for a time, but when the end came, it was abrupt - a not unfamiliar phenomenon in the world of hedge fund investing. (For related reading, check out Losing The Amaranth Gamble.)
- "Julian Robertson: A Tiger in the Land Of Bulls And Bears" by Daniel A. Strackman (2004).
"Our mandate is to find the 200 best companies in the world and invest in them, and find the 200 worst companies in the world and go short on them. If the 200 best don't do better than the 200 worst, you should probably be in another business."
"When Robertson is convinced that he is right," a former Tiger executive notes, "Julian bets the farm."
"Hear a [stock] story, analyze and buy aggressively if it feels right."
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