A generation of hedge fund legend dies

time:2022-12-09 10:05:04source:chakarski.com author:Individual stock analysis
A generation of hedge fund legend dies

On August 24, Tiger Fund founder and Wall Street wizard Julian Robertson died of a heart attack at home at the age of 90. Robertson is known as one of the most influential hedge fund managers in the world. He founded the famous hedge fund Tiger Management in 1980. Its performance is quite astonishing, with an annualized performance of 25%, which is rare in the world. The fund closed in 2000, and Tiger Management's assets soared from $8.8 million to $22 billion in 20 years, making it the largest hedge fund in the United States at one point. Robertson's net worth is estimated at $4 billion. Robertson successfully predicted that the German stock market would enter a bull market after the fall of the Berlin Wall, and predicted the disaster of the global bond market. Not only that, but Robertson is also good at spotting talent, hatching "Tiger Cubs," which include "cubs" and "tiger cubs" hedge funds like Tiger Legatus and Tiger Global, and A slew of high-profile fund managers, including a new generation of investors including Chase Coleman, Philippe Laffont and Lee Ainslie, Robertson is also known as the godfather of hedge funds. It is worth mentioning that Bill Hwang, who suffered the big blowout of the century, is also a member of the Tigers Club and is under the tutelage of Robertson. In general, Robertson’s investment strategy focuses on value investing, that is, he calculates a reasonable price based on the profitability of listed companies, and then buys on dips and sells on highs. Although the tech bubble finally burst, Tiger Management had missed out on the rapid growth of tech stocks, and then suffered huge losses due to massive shorting of the yen, and was forced to close all of its fund businesses. Robertson believes that making money in the stock market is not difficult. The Wall Street wizard's main investment philosophy is: "Avoid big losses while making big bets when you feel right." His investment philosophy is also widely sought after by the world. His 12 investment mantras.

1. Inspiration, exhaustive research, and big bets

A colleague of Robertson has said that once Robertson is convinced that he is right, he will bet heavily. Robertson is a typical value investor. In his view, the essence of the hedge fund industry is to patiently search for those "untapped, value-realizing potential" cheap companies, find them carefully and invest heavily, and then wait. Get rewarded.

2. Avoid competition in order to increase the success rate

Robertson said that the average result of each hedge fund's shot determines the final return, "In a market with relatively weak competition, Instead, there is a greater chance of making a profit.” Taking baseball as an example, it is easier to increase batting average in a lower league than in a higher league because the competition is not as strong. Robertson once said: In baseball, you can hit 40 home runs on an A-league team and never get paid. But in a hedge fund, you get paid on the average of your success. So you should go to the "worst" league you can find and stand out in low confrontation.

3. Long-short strategy

Robertson believes that from the perspective of hedging risks, the best practice for hedge funds is to long and short different stocks. He once said: Our task is to find and invest in the 50 best companies in the world, and find and short the 50 worst companies in the world. If you find that the 50 best companies are not doing as well as the 50 worst companies, it means you are not a good fit for the job.

4. The secret to long-term profitability is to avoid major losses.

Robertson believes that the secret to long-term profitability of hedge funds lies in how to outperform the market when the market is underperforming. In addition to the hedging effect of a long-short strategy, there is another way to avoid big losses: take the opportunity to buy companies that are clearly undervalued when the market is not doing so well. Robertson pointed out that when looking for the right entry point in terms of price, investors can make mistakes, when the company's financial situation is more reliable, "it is very important to be safe than sorry."

5. Choose the right company to short

Many hedge funds do not do any hedging themselves, but Robertson likes to short stocks that are seriously overvalued. His take on short positions: In my shorts, I look for companies with bad management, or short overvalued companies in industries that are in a down cycle or that are misunderstood by the market.

6. Be the sole decision maker

Robertson assigns much of the research and analysis to others, but he is always the one making the decisions. He believes that a good researcher is not necessarily a good decision-maker, and that the real decision maker requires excellent emotional control. Many times, investors' mistakes are not caused by analysis, but by psychological fluctuations. "Not many people have the ability to pull the trigger, and I'm usually the one who pulls the trigger," he said.

7. Avoid Gold

In Robertson's view, gold trading is often based on predictions of human nature. This is not investment, but speculation. He said: I don't like investing in gold, because the investment logic of gold is not so much to analyze the value of gold itself, but to analyze the psychology of those gold investors.

8. Full commitment

Robertson said before: When you are managing money, it may dominate your entire life, maybe you have to invest 24 hours a day, Hedge funds are by no means an industry for lazy people to survive.

9. Accumulation and explosion

Hedge funds are an industry that accumulates reputation. "The hedge fund business is about success breeds success," Robertson said. Over time, the accumulated results will ultimately help you succeed, and this is our growth. In addition, the Matthew effect in which the strong keep getting stronger and the weak get weaker means that only with stable profits will the fund scale grow and form a virtuous circle.

10. Have a clear understanding of oneself

Robertson believes that falling from a height to the bottom can make people recognize themselves, and the praise and criticism from the outside are not so important. It is ridiculous to influence one's own judgment because of the opinions of others. He said: I remember being on the cover of Business Week once and becoming "the greatest analyst in the world". Three years later, however, I was severely criticized. It would be pretty stupid to let the opinion of the media influence how you think about yourself or what you do. Trust me, these remarks don't matter, don't let the asshole bring you down.

11. Know how to advance and retreat

Robertson said that the market is always changing, and the strategies that were used before may be disastrous in the future. He believes that many successful investors understand the truth of rapid retreat. Case in point: In 1969, Buffett also stated in his investor letter that he decided to liquidate the fund because he could not find a suitable opportunity.

12. Cultivate interest from childhood

Robertson once said: I still remember the first time I heard about stocks when I was six years old. My parents were traveling and my aunt showed me a company in the newspaper called United Corp. (United Air Transport), which was listed on the NYSE and was selling for about $1.25 at the time. That's when I realized that maybe I could save enough money to buy stocks, which gradually piqued my interest in investing. If you want to cultivate a child's interest in investing, it is best to instill some key ideas in him from an early age. Give them some real money, it doesn’t take much, real experience makes sense, and the earlier you get into a field, the better your chances of success in the future. This article does not constitute personal investment advice and does not take into account the particular investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions contained herein are appropriate to their particular circumstances. There are risks in the market, investment needs to be cautious, please make independent judgments and decisions.
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