Billionaire Julian Robertson Dies At 90 – Contrarian Investing Guided His Pioneering Hedge Fund

Julian Robertson, who built one of the most successful hedge funds of the late 20th century and later seeded many of his proteges’ firms, died Tuesday of cardiac complications at age 90.

Behind a style of “controlled aggression,” as Forbes described in a 1990 story, Robertson’s Tiger Management outperformed peers like George Soros and Michael Steinhardt for years by finding underpriced small cap stocks, buying into “forgotten markets” and short-selling industries where Robertson was bearish, often bucking conventional wisdom. His Tiger Management returned 32% annually from its launch in 1980 through 1998, and assets peaked at $22 billion before a short bet gone wrong against the Japanese Yen led to a wave of withdrawals.

Robertson closed the firm in 2000 and seeded some of today’s most notable and successful hedge funds, known as Tiger Cubs, including Chase Coleman’s Tiger Global, Philippe Laffont’s Coatue Management and Stephen Mandel’s Lone Pine Capital. Forbes recently estimated his fortune at $4.7 billion. He first appeared on our Forbes 400 list of Wealthiest Americans in 1997.

“Hedge funds are the antithesis of baseball,” Robertson told Forbes in 2013. “In baseball you can hit 40 home runs on a single-A-league team and never get paid a thing. But in a hedge fund you get paid on your batting average. So you go to the worst league you can find, where there’s the least competition.”

Excluding his wealthy clients, which over the years included author Tom Wolfe and singer Paul Simon, Robertson’s Tiger Management spawned no fewer than six billionaires among hedge fund managers. One notable Tiger alum, Bill Hwang, amassed a $35 billion fortune at Archegos Capital Management before it crumbled in a matter of days in 2021. He now faces charges on 11 counts related to market manipulation.

Starting a hedge fund was a second career for Robertson, a native of Salisbury, North Carolina who graduated from the University of North Carolina in Chapel Hill. He spent two years serving in the Navy and then 21 years at former white-shoe investment bank Kidder Peabody, starting as a stockbroker and becoming the chairman of its investment subsidiary. In 1978, he took his wife and two young children at the time on a year-long sabbatical to New Zealand, where he wrote an autobiographical novel he never published about a young Southern man in New York City.

“I think I write fairly well, but I learned during that year that I am not a novelist by any stretch of the imagination,” Robertson told Forbes in 2012, though he maintained a lifelong affection for New Zealand and operated several resorts and golf courses there.

Back in the U.S. and revitalized, Robertson spurned the administrative chores and declining commissions of stockbroking and tried his hand at a new type of firm called a hedge fund at age 48. He and his partner Thorpe McKenzie started Tiger Management in 1980 with $8.8 million, including $1.5 million that made up essentially all of their own available capital.

“I love to compete – against the market and against other people,” Robertson told Forbes during Tiger’s heyday in 1990.

His success made him one of Wall Street’s wealthiest and most respected minds, though he never shed his southern drawl, and he was a generous philanthropist, giving away more than $1.5 billion to causes like medical research and environmental protection. His $24 million gift in 2000 established the Robertson Scholars program, which gives students at his alma mater UNC and its neighboring rival Duke full rides and encourages collaboration between the two schools.

In his later years, Robertson said he might choose a different career path if he were coming of age now.

“People wonder why hedge funds aren’t doing better–I think it is from increasing competition from other hedge funds,” he said as one of the 100 greatest living business minds featured for Forbes’ 100th anniversary in 2017. “If I were starting out now, I would look at what the competition is like in various fields–and then consider some that aren’t so popular.”

In the 1980s, Robertson’s methods were trail-blazing. Below is the first article Forbes published on Robertson, part of an April 1985 cover story entitled “The Short-Sellers: On What Meat Do They Feed.” It was a time when stock portfolios containing both long and short positions and performance fees of 20% were both novel and controversial.

Tiger’s Purring

By Matt Schifrin

Hedge fund manager Julian Robertson hates cats because they kill birds but dogs are something else. “I love dogs,” says Robertson, who runs two New York-based hedge funds. For owning? No, for selling short.

He means stocks like Tandem Computers, Newpark Resources Pizza Time Theatre and Petro-Lewis, which helped him rack up 25% gains in last year’s dismal market.

“There are tremendous opportunities on the short side,” says Robertson, who, despite his dislike for cats, calls his funds Tiger and Jaguar — a case perhaps of his dislike of the cat breed overcome by his admiration for their prowess. He keeps the pair well fed. Started in 1980 with $10 million, Tiger and Jaguar now have $160 million in equity and have afforded such lucky limited partners as singer Paul Simon and author Tom Wolfe net returns averaging 40% a year. Not sustainable, perhaps, but mouth-watering all the same.

A true hedgie, Robertson works both sides of the market, the short and the long. He uses the same techniques on both. “Julian is not a gunslinger like the other hedge fund guys,” says Eliot Fried, chief investment officer of Shearson Lehman Brothers. “Tiger doesn’t invest and then investigate.”

Instead, Tiger treats all of its 160 positions — long and short — as long-term investments. (Jaguar, smaller, with mostly foreign partners, is more nimble.) Tiger is still shorting battered oil service stocks after nearly two years. It is also sitting with huge losses (“a couple of million bucks”) in generic drug firm shorts. “Still sticking,” says Robertson.

Sticking sometimes means getting stuck. Confesses Robertson: “I shorted Dean Witter back in August 1981 at 29 because I was bearish on the brokerage stocks. Sears took over Dean Witter. Tiger had to cover at 48 and lost over $250,000.” Sometimes he is right for the wrong reason. “I once went long Babcock & Wilcox because I was bullish on nuclear power. Along came McDermott to acquire B&W, and I made a bundle.” He pauses and smiles. “Eventually I was right about Witter and wrong on B&W, but I made money where I was wrong and lost money where I was right. You have to have a sense of humor in this business.”

Robertson’s only other job was with Kidder Peabody — 22 years, first as a broker and later as chairman of its investment subsidiary, Webster Management. After years of barely beating the market, Robertson quit to start Tiger. He analyzed his mediocre results and concluded that he had been spending too much time on administrative chores and was too limited by institutional constraints. “We weren’t managing money,” he says. “Now we do it all day long, and it’s fun.”

But all is not fun and games for Tiger’s crew. Robertson expects intense fundamental analysis on every position. If none of Tiger’s four portfolio managers can handle the job, Tiger hires consultants to help with analysis. On the payroll have been an executive of a large insurance company, a physician and an aviation specialist.

Recently, Tiger has been stalking medical technology firms. Robertson admits he is no medical whiz, so Tiger’s medical consultant, M.D.-M.B.A. John Nicholson, helps the firm find potential shorts and longs.

As with other hedge funds, Tiger’s crew is paid handsomely when the profits roll in and not at all when they don’t. Robertson and his three sons have the biggest stake in the partnerships, with close to 13% of the $160 million in equity. Also, as general partner his stake in the profits is 20%, some $5 million last year. (If, however, the funds have a few down years, Robertson doesn’t get paid until the fund rises to the last point at which he drew from the profits.)

Robertson figures that about 30% of his 20% share goes to paying the portfolio managers. The rest is gravy. A sliding management fee of about 0.8% of assets pays for overhead and backup staff.