Patrick McCormack: Tiger Consumer Management

Patrick McCormack-led hedge fund Tiger Consumer Management. The fund shutdown in March 2015, returning all money to investors after 15 years in operation.

Patrick McCormack Tiger Consumer Management
Patrick McCormack Tiger Consumer Management

Tiger Consumer Tiger Consumer Management was one of the original Tiger Seeds. Launched during 2000, the fund received backing from Julian Robertson’s Tiger Management Corp. According to Patrick McCormack’s final letter to investors, he shut Tiger Consumer “to spend more time with his family”.

McCormack told his investors in a letter, “Managing a fundamentally driven, long/short equity hedge fund is rewarding but demanding work. I have decided after nearly 15 years of doing so, at this stage of my life, I would like to spend more time with my family.”

“The decision to wind-down is one of the most difficult I have faced, but I have given it considerable thought and believe now is the best time to do so, particularly given a strong start to the year”.

The quarter before it closes was especially tough for Tiger Consumer. During the third quarter of 2014 the fund reported assets under management of $2 billion. However, by the end of 2014, AUM had dropped to $1.4 billion.

Tiger Consumer Management: Performance

To the end of 2012, since inception on June 15, 2000, Tiger Consumer is up 160.0%, or 7.9% annually, compared to a 23.1% increase, or a 1.7% annual increase, in the S&P 500.

Tiger Consumer uses a long/short strategy and has generated a positive alpha in down markets, with virtually all down market alpha coming from shorts. The fund shorts stocks in particular, not ETF’s or a basket that mirrors the fund’s custom benchmark. Be definition, in Tiger Consumer’s strategy, shorting an ETF/basket is not alpha producing, and thus, the fund’s results, particularly in down markets, would have been meaningfully worst than that reported.

To the second quarter of 2012, across Tiger Consumer’s life, 145 months in total, the fund had worked through down markets lasting a total of 58 months and up markets lasting 87 months in total. In down markets, the fund achieved a total alpha of 28.2%, thanks to short positions. In up markets, the fund achieved an alpha of 53.5%, mostly from longs.

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