Photographer: Eric Thayer/Bloomberg

Tiger Cub Citrone Sees Market in Biggest Correction Since 2008

  • Discovery’s Citrone says downturn may last 3 to 4 months
  • It’s a ‘healthy adjustment’ in overvalued market, Citrone says

Robert Citrone, the Tiger cub who now runs one of the best-known macro hedge funds, is warning investors that the market moment they’ve been anticipating is at hand.

“We believe we are in the midst of the market correction we have been expecting," Citrone, founder of Discovery Capital Management, told investors in an e-mail obtained by Bloomberg. “It will likely persist over the next 3-4 months and be the largest correction since the 2008 crisis,” he said. The firm managed about $12.4 billion at the start of 2016.

Robert Citrone
Robert Citrone
Photographer: Gilbert Carrasquillo/FilmMagic

Money managers including Paul Singer have signaled that the markets may be on the precipice as central banks reexamine monetary policy. In remarks last week at the CNBC Institutional Investor Delivering Alpha Conference, Singer said years of easing had created "a very dangerous time in the global economy and global financial markets." Carl Icahn, who warned of risks at the same event, described predicting the moment of a correction as "sort of a guessing game."

Market volatility returned on about Sept. 9, when concern that central bankers may be losing their appetite for further stimulus efforts spurred the biggest slump since the U.K. secession vote in June, ending the summer’s calm. The CBOE Volatility Index has increased about 19 percent this month through Sept. 20.

Citrone, whose fund specializes in making wagers on macroeconomic events, tempered his view by describing the correction as a "healthy adjustment from overvalued market levels, which are primarily a result of exceptionally easy monetary policies." One of the many hedge fund managers dubbed Tiger cubs after working at Julian Robertson’s Tiger Management, Citrone founded Discovery in 1999.

Patrick Clifford, an external spokesman for Discovery, declined to comment.

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