Remembering a Money Master

Earlier this week, we published the famed Tiger Management Investment Frameworks for long and short-term investments. We published the first note on what would have been Tiger founder Julian Robertson's 92^nd birthday.

Today, we wanted to share some of Julian's story and what his legacy can mean for you as a regular investor.

For those unfamiliar with Robertson, he founded one of the most famous and successful hedge funds in history – Tiger Management.

After a few years in the Navy, Robertson moved to New York and joined storied brokerage firm Kidder, Peabody, and Company as a stockbroker – eventually becoming the head of the firm's asset management division.

In 1980, with $8 million from family and friends, he founded Tiger Management. The firm eventually peaked with $22 billion in assets and has one of the best track records in modern investing history.

Beyond the success of Tiger, Robertson is almost equally well known for the success of those who worked at the fund (dubbed "Tiger cubs") or others who were trained at the Tiger cubs' funds ("Tiger grand cubs"). These funds include Viking Global, Lone Pine, Maverick, and Tiger Global.

Combined, these funds now manage hundreds of billions and have probably created more value for investors than any other group in history.

I have a history with Julian and Tiger. My first buy-side job was at a firm called Atalanta Sosnoff Capital, which was in the same building as Tiger – we were just 42 floors below them. A few years later, I also interviewed for a job with Viking Global, but unfortunately, I did not get the job.

Many years later, though, I eventually worked for one of the Tiger grand cubs when I joined my old friend Rick Gerson at the founding of his firm Falcon Edge Capital. Rick had worked for the legendary John Griffin, one of the more famous and successful Tiger cubs of Blue Ridge Capital since its founding. Not to mention, he was also one hell of a human being!

At Falcon Edge, I had the opportunity to see the Tiger research process firsthand.

As we discussed earlier this week, that process revolved around the concept of value-added research ("VAR").

The idea was that investors shouldn't just rely on Wall Street's research or even what the company says, but they should find outside sources that create the most transparent picture of the company's fundamentals and competitive positioning.

This could involve speaking with customers, competitors, consultants – you name it.

It would be typical for us to speak with literally hundreds of non-Wall Street sources when developing a thesis on a significant position.

This research was coupled with trying to understand what was not widely understood by Wall Street. This was called "variant perception" and was always critical to an investment.

It was great to use outside sources to develop a clear picture of a company's positioning, but did we have an insight that was any different from what everyone else was thinking?

Another aspect of this process was that it was exhaustive and relentless!

This was no "checking the box" exercise... It was more like training as a professional athlete. As I mentioned, we would sometimes do hundreds of interviews, and our internal reports could run hundreds of pages.

Julian and his protégés have many other legacies we could discuss, but this exhaustive research process is the most powerful one and the one that I got to experience firsthand.

So, what does this mean for the regular investor?

Well, the first thing to consider is to remember that this is your competition.

These are very incentivized investment firms with lots of capital and the ability to do research at a level that an average investor would never come close to accomplishing.

This is why focusing on the big picture and long-term investing makes the most sense for individuals.

If you get the big picture right with a significant thesis, you don't need this degree of due diligence to support your thesis.

A long-term emphasis also allows you to look through some of the more minor details.

This is not to say that the Tiger firms don't also look at the big picture and the long term, but they have a much greater ability to optimize in the near term.

Individuals should be looking years out to maximize returns.

That said, understanding your investments is crucial to investment selection and having the conviction to stay invested during the most challenging times.

Do some work on what you own and make sure you understand your positions, as that ultimately leads to the best investment success.

Check out Enrique Abeyta’s conversation with Gabriel Grego, founder of Quintessential Capital in the latest episode on the HX Podcast, or watch on our YouTube.

Gabriel has been a value investor and activist short seller for more than a decade, focusing on uncovering frauds and illegal activities to identify short-selling opportunities.

While all investors need to do their research, Gabriel has taken it to a near “secret-agent” level of investigation. We’re talking cloak and dagger stuff, dressing up like a delivery man, infiltrating essentially criminal organizations and the like. Not for the faint of heart!

Luckily his experience as a paratrooper in the IDF has given him the nerve, and his education and intellect have given him the wherewithal to sniff out and act upon his discoveries. Lots of great stories and insights to enjoy on this one!