Tiger Consumer Management was started by Patrick McCormack, a former analyst at Tiger Management. McCormack’s hedge fund, is a ‘Tiger Fund, and was seeded by Julian Robertson, CEO of Tiger Management. The hedge fund currently has approximately $2 billion in assets under management.
According to our sources with direct knowledge of the matter, the fund was down around 2% as of Q2 2012 against 2.8% of S&P 500. For the year, the fund has a positive return on 7% compared to 9.5% for S&P 500. Since inception in 2000, Tiger Consumer has returned 8.4% annually, versus the S&P500 return of 1.3% CAGR. The contribution of various components to the fund’s year to date gross return of around 8 percent are 3 percent from alpha, 2 percent from beta and around 4 percent from leverage.
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McCormack states that much of the fund’s success is due to successful short positions. According to McCormack focus on short alpha is much more important in a down market condition, than in an up market. And shorting individual stocks are much more meaningful than shorting ETF in down markets.
As per the sources, Tiger funds have generated around 81 percent of the total alpha with 57 percent longs and around 24 percent shorts. Also all the long alpha had come in up market scenario against more than 100 percent of the short alpha in down market. It is certainly the result of the strategy that helped the fund to generate positive cumulative alpha, despite markets being down, not only this but almost the entire down market alpha came from shorts. This could be the reason why the fund shorts individual stocks and not ETF, or benchmarks.