Hedge-fund prodigy takes a $300 million hit
- Thread starter RedDuke
- Start date
She will likely come back being funded by $500 million next time. The Street loves big risk takers win or lose and rewards them handsomely. It hates the churners and wimps and they get what they deserve from the Street of dreams -- surf
You do realize that the funds with the biggest AUM are the ones with the least volatility. Has been that way for a long time. Go and take a look at a list of the biggest blow ups and see what those PM's are managing now. Little to nothing. For a hedge fund expert you sure don't seem to know much.
Surf, would you allocate funds to this woman? Is this the kind of fund manager you're seeking?
No, there's no edge to her strategy. surf
This is simply an example of what can happen with concentrated risk, and it's not very surprising, since many hedge funds seek to outperform an index with such strategies.
She had 20% of her fund in ONE stock, hence the concentration of risk (and gains when it was up, losses when it went down). Other hedge funds also had concentration risk in Valeant such as Ackman's Pershing Square fund, however not as much as Ratan.
I don't follow the stock, although it's had some negative news headlines on their failed attempts to overtake Allergan, among other things. If she had done simple technical analysis, the stock was a SELL when it breached $200, as there was a gap below around $175 which filled and then failed to rally back.
This article states that her losses are still paper, meaning she hasn't sold all of the position, although she did pare it down to 10%. Basically, she held too long and got greedy.
Despite the loss, it seems the fund has done well since its 2009 inception, so it's all relative to the overall net annualized gains that investors have in the fund.
http://www.valuewalk.com/2015/11/tiger-ratan-valeant-vrx/
"Long-term holding
Tiger Ratan has owned Valeant shares for much of its six-year life and Julian Robertson, the founder of Tiger Management LLC, has credited Ms. Chopra for bringing the investment idea to a number of other funds managed by Tiger Cubs."
The question her investors should be asking is this:
"You held a pharmaceutical stock for six years that became an EIGHT BAGGER, what the f*%k was your EXIT strategy?"
Tiger Ratan has owned Valeant shares for much of its six-year life and Julian Robertson, the founder of Tiger Management LLC, has credited Ms. Chopra for bringing the investment idea to a number of other funds managed by Tiger Cubs."
The question her investors should be asking is this:
"You held a pharmaceutical stock for six years that became an EIGHT BAGGER, what the f*%k was your EXIT strategy?"
You're supposedly an allocator -- so how do you reconcile that Matador never had more than $500MM, and as EPrado stated, the low-vol returns get the most capital? Astenbeck, for example, has $2B in AUM. Why does Bridgewater have $150B while returning 6%?
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