According to a report from Bloomberg Business‘ Katherine Burton, TigerShark Management, one of the original Tiger seed hedge funds started by proteges of billionaire investor Julian Robertson, is closing after a 14 year run.
TigerShark was founded by Tom Facciola and Michael Sears, and is known for its strong performance during the dark days of the financial crisis. The fund will return its approximately $100 million in client assets by the end of this month, according to a Bloomberg source with knowledge of the privately held firm.
Tough trading conditions for market neutral hedge funds
The apparent closure of TigerShark, which began operations back in early 2001, and had an AUM of $300 million at its peak, makes it clear how tough it is for market-neutral funds to prosper during a bull market.
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The Bloomberg article notes that market neutral hedge funds returned an average of close to 13% from the end of 2008 through the end of February this year. The S&P 500 Index soared 166% including dividends in the same six years and two months.
The source noted that TigerShark typically averaged a net exposure of 12% to 15% in its main fund. The firm also managed a smaller short-only fund.
Of note, TigerShark’s main fund has not kept up with the S&P 500 Index in recent years, but it returned more than 10% during the bear market of 2008 when hedge funds fell by an average of 23% and the S&P 500 nosedived almost 40% that year.
TigerShark Management was an original Tiger seed
Facciola and Sears founded the fund after working for Robertson for just a year or so. Both men joined Tiger Management shortly after Robertson’s decision to return outside capital after assets shrank by $16 billion over a year and a half in late 1998 and 1999. When Robertson closed Tiger, he seeded several hedge funds that were run by his former fund managers.
TigerShark isn’t the first Tiger cub to recently close its doors. Patrick McCormack wrote a letter to clients earlier this month notifying them he’s shuttering Tiger Consumer Management after 15 years to focus on family and personal projects. “Managing a fundamentally driven, long/short equity hedge fund is rewarding but demanding work,” he noted in his letter.