WFH1187

What Would Happen if the Tiger Cubs Managed Your Portfolio?

Bringing attention to the enormous success of the Tiger Cubs is commendable, but any talk of cloning their long-only holdings is an incomplete story at best, and dangerously misleading at worst. Robertson has always built his strategy around being a true hedge fund and targets alpha on the short side as well as the long side. All of his proteges approach investing the same way, and while their longs may or may not do better than the market, dynamic position sizing is important in their portfolio composition (all bets are not equal), and the short side of each portfolio's story is as important, if not more important, than the long story. I have some immediate issues with the composition of the model portfolio the clone uses, but more importantly, the issue of boxed short positions being included in the filings (though not for the largest positions) is real: go back and look at the smallest positions disclosed by the funds in each of their 13F-HRs, as well as the holding periods for each position, and it is pretty easy to figure out that some of the short positions can be interpreted (because they are "boxed" with longs) in the filings. While following the Tiger investment strategies broadly is useful to anyone, attempting to directly 'clone' the cubs' performance leaves at lot out of the equation (and I haven't even mentioned CDS/OTC derivatives they may have used to make significant macro bets- look at what Robertson says about his largest personal position: it is a curve steepener).