The practice of continuous learning and the pursuit of value investing have enabled the assets managed by Tiger Fund to grow significantly over the years.
One of the legendary investors Julian Robertson
Legendary investor Julian Robertson Part 2
Julian, the legendary investor.Julian Robertson ter
Julian, the legendary investor.Julian Robertson IV
The Reasons of Tiger Fund’s Success and Collapse (Part 2)
In addition, Robertson also greatly promoted the use of leverage in hedge funds. The investment strategy works like this: At any given time, the aggregate value of a stock position is two or three times its underlying investment capital. During this period, the net long position (long minus short) represents only a small fraction of its underlying invested capital. Through the use of leverage, Tiger Funds can aggressively invest their money in the best possible long and short positions. Leverage allowed Tiger to increase its exposure to the best opportunities while reducing its directional exposure to the overall market.
The use of leverage has been an important factor in Tiger’s success over the years. Robertson’s understanding of risk is the reason why Tiger Fund can make huge profits. He makes investment decisions based on analysts’ recommendations, and then doubles and triples his positions without the analyst’s knowledge. He does this a lot.
Says one analyst, “He’s constantly challenging your ideas and questioning how far an idea can really go. At the end of the day, I don’t know what he’s basing himself on to determine that he can easily reach a certain level. I just You know, most of the time, he’s going against my advice. And, most of the time, he’s right.”
Most traders are pursuing a trading method and trading rules with a high winning rate, trying to use 100% correct judgment to conquer the market and obtain profits. After being beaten back to its original shape by the market again and again, it fell into a vicious circle, and the result can be imagined. Pros and cons of breakout trading:
Robertson’s beliefs led him to be willing to take risks that analysts might not be willing to take, but his beliefs also forced him to seek expertise outside his or his inner circle of teams that they didn’t understand. Even when he relies on the ability and judgment of others to analyze a position, he often questions it.
Once a trade is settled, Robertson and his analysts are constantly arguing over the timing and size of the position. Sometimes he wanted to add to his position even though the analyst told him it was a bad idea; other times he said no to analysts who thought they should invest more money.
Robertson and his analysts often debated the size of positions, all for the profit shown on the income statement. The income statement has become a strange referential thing. Based on the positions, the analysts would calculate how much money Robertson would have made or lost had he traded as they suggested, compared to what Robertson had actually done. Sometimes the relationship works well; other times it works poorly, and there is nothing the analyst can do about it.
Robertson strongly advises analysts not to focus solely on the obvious choices, such as buying Walmart stock and selling Kmart stock. He asked the analysts to find hidden treasures. During his time in charge of the Tiger Fund, Robertson is proud of the fact that he has tried his best to understand a lot of companies. His ability to remember information is miraculous, which is why he and his colleagues sometimes have friction.
With the increase of funds, Robertson’s investment style began to change from focusing on direct value investment based on stocks to multi-strategy global macro investment. He continues to train analysts, and growth stocks have become his excellent investment direction. If analysts are right about growth, growth stocks will do extremely well. These stocks may underperform for a year or two, but if they are true growth stocks, they will continue to grow over time.
Robertson understood this all his life, that a fund manager’s career depends on his ability to acquire, gather and process information. All Tiger Team members also understand the value of information and, more importantly, how to use the information they gain to profit from the market.
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