Tiger Asia Fund Said to Fall 16% on China Stock Shorts
(Corrects date of Tiger Management founding in last paragraph.)
Tiger Asia Management LLC, the New York-based hedge fund being investigated by U.S. and Hong Kong regulators, fell 16 percent this year, hurt by bets against Chinese stocks, said a person with knowledge of the firm.
The decline through May 15 was softened by a 10 percent gain in the first two weeks of this month, according to the person, who asked not to be identified because the fund is private. Assets dropped to $1.3 billion in April from $2 billion on Dec. 31 and $3 billion at the end of September.
Bill Hwang, who founded Tiger Asia in 2001, had more than 90 percent of his short positions in China in the first quarter, betting that prices for financial, Internet and media companies would fall, the person said. Hedge funds that both buy stocks and sell short fell an average of 6.4 percent through May 13, according Chicago-based Hedge Fund Research Inc.
“It’s extremely difficult for managers to be short,” said Stewart Massey, chief investment officer at Massey, Quick & Co. in Morristown, New Jersey, which manages $3 billion on behalf of endowments, foundations and wealthy clients. “Valuations for companies that look fairly valued or even overvalued keep rising.”
Hwang said in a February investor letter that he was disappointed with the fund’s 0.5 percent gain in 2010, citing shorts as a “major drag on returns.” Short sellers seek to profit from price declines by selling borrowed securities, with the aim of replacing them with stock bought at lower levels.
Analyst Turnover
Tiger Asia’s loss this year compares with gains through May 13, including dividends, of 1.93 percent by Hong Kong’s Hang Seng Composite Index and 3.4 percent by the Kospi benchmark in South Korea. The CSI 300 gauge in China was little changed and Japan’s Topix dropped 5.6 percent.
Four analysts left Tiger Asia earlier this year, while it made one hire from Kelusa Capital, the person said. The company employs seven analysts and two traders. Patrick Clifford, a Tiger Asia spokesman, declined to comment.
The firm told clients in October that it had received a subpoena from the U.S. Securities and Exchange Commission following allegations of insider trading from Hong Kong’s securities regulator. Tiger Asia, which denied any wrongdoing, told clients it’s cooperating with the SEC and was fighting an injunction to freeze some of its assets filed by the Hong Kong Securities and Futures Commission.
Backing From Robertson
There is nothing new to report on the ongoing investigations, the firm told investors in a May 10 note, according to the person. The firm is also being investigated in a parallel review by the U.S. Attorney’s office for the district of New Jersey, according to a Nov. 9 note to investors.
Tiger Asia is one of the Tiger Cubs, a group of hedge-fund managers that received backing from Julian Robertson or worked at Tiger Management LLC. Robertson founded the New York-based firm in 1980 and built it into one of the world’s largest hedge- fund managers before returning clients money in 2000.
To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net.
To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net.
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