On Tuesday, Julian Robertson, a Wall Street investor who helped pioneer the current hedge fund sector along with a small group of colleagues, passed away at his home in Manhattan. He was 90. His son Alex claimed the cause was heart problems.
Mr. Robertson managed over $22 billion in six funds in 2000, two years before he abruptly shut down his prominent Tiger Management Corporation investment firm. These funds held long and short positions in a wide variety of stocks, bonds, commodities and currencies around the world.
He continued to manage his own multibillion-dollar fortune well into his 80s. Mr. Robertson, a gentlemanly North Carolinian who always looked sharp in his suits, was not only a champion investor (he was once called “the best stock picker on the Street”) but also a mentor to dozens of aspiring hedge fund managers.
Tiger “cubs” were traders who worked for him before striking out on their own and Tiger “seeds” were the fledgling investment funds he helped fund. In 2016 George Soros, the most famous of the early hedge fund pioneers said, “Julian Robertson is one of the few hedge fund managers I admire as much for the way he’s used his money as for the way he made it.”
This was in reference to Robertson’s philanthropy as well as his investment culture. In Sebastian Mallaby’s industry history “More Money Than God: Hedge Funds and the Making of a New Elite” (2010), James S. Chanos, a famous short-seller who managed money for Mr. Robertson, Mr. Soros and Michael H. Steinhardt in the 1980s, is reported as saying, “if I were to give my own money to any of them, I would have given it to Robertson.”
Mr. Robertson’s investment strategy revolved around shorting stocks or making investments based on the wager that a company’s stock will decline, in an effort to hedge against the risk of overall market movements. Though the practice had been practiced for centuries, Mr. Robertson made it a fundamental feature of his trading.
“Our mandate is to find the 200 best companies in the world and invest in them and find the 200 worst companies in the world and go short on them,” he would explain. “If the 200 best don’t do better than the 200 worst, you should probably be in another business.”
Finding companies that were undervalued or overvalued was critical but when Tiger’s impressive performance inflated its holdings he started trading more regularly. In time, he started to factor in broader economic and political shifts too. He branched out into commodities and was once said to have controlled the world’s supply of palladium for nearly a whole year.
Palladium is used in vehicle catalytic converters. Mr. Robertson led Tiger to yearly gains of 31.7% after fees between its start in 1980 and its peak in 1998, well outpacing the rise of the S&P 500 stock index (12.7%). In only four of Tiger’s 21 years did it exhibit a loss.
These results disproved the efficient market hypothesis, which states that investing success is impossible because market prices instantly reflect all available information. On June 25, 1932 in Salisbury, North Carolina, Julian Hart Robertson Jr. was born.
His father was a textile businessman who, according to Robertson, claimed to be a descendant of Pocahontas. Blanche, his mother, was a community volunteer and, in the mayor’s words, the “biggest cheerleader” for the city.
After graduating from UNC-Chapel Hill, where he was a member of the Reserve Officers’ Training Corps and a self-proclaimed “geography freak,” he spent two years in the Navy, during which time he traveled the world aboard a munitions ship. He credits his time there for helping him mature as a leader; as a lieutenant in junior grade, he was frequently given weekend command of the ship.
In an interview for his obituary that was conducted in 2016, Mr. Robertson reflected on his decision to remain in North Carolina following his time in the Navy. However, had he stayed, he would have most likely worked in the textile industry as a manager. To make money, he remarked, “My father thought strongly that I should go to New York.”
He entered the business as a sales trainee at Kidder, Peabody & Company and rose through the ranks, earning a name for himself as a specialist in locating undervalued stock. But by 1978, Mr. Robertson had grown weary of the associated marketing duties, so he took a leave of absence.
He moved his family, consisting of his wife and two small boys, to New Zealand. His 2016 claim, “I thought I could write the great American novel,” illustrates his confidence in his own abilities. His sister Wyndham Robertson, a journalist at Fortune magazine, convinced him to give up on the “narcissistic” book he had been writing.
But he fell in love with New Zealand, proclaiming it to have the best geography for its size in the English-speaking world and years later he built three major resorts there, helping to boost the country’s booming tourism economy. He bought the 4,800-acre Lodge and Golf Course at Kauri Cliffs for the price of a small condominium in New York, he added.
Soon after its opening in 2000, Golfweek magazine ranked it among the top five courses in the world. When Mr. Robertson returned to New York after 22 years at Kidder, Peabody, he decided to strike out on his own and make his mark on Wall Street by founding Tiger Management with an $8 million share of his own money and friends’ money.
Having “become convinced” that short-selling was “a license to steal,” he said he eventually decided that investing through a hedge fund was the best option. Mr. Robertson did well initially, but his results began to suffer as the year progressed, due in large part to the hype surrounding unproven dot-com firms.
Investors pulled out and a perplexed Mr. Robertson shut down shop in the year 2000 since his plan was no longer profitable. “There is no point in subjecting our investors to risk in a market which I frankly do not understand,” he told investors.
Mr. Robertson was reported as saying, “The mistake that we made was that we got too big,” by Daniel A. Strachman in the 2004 book “Julian Robertson: A Tiger in the Land of Bulls and Bears.” According to him, “to make it meaningful we had to buy a huge quantity of a company’s stock and there were only a few companies” where such purchase was possible.
The collapse of US Airways was blamed on a number of factors, including Mr. Robertson’s authoritarian management style, rising levels of competition and significant speculative losses in US Airways stock and the Japanese yen. Mr. Robertson leaves behind his son Alex, his sister Wyndham, two other sons, Spencer and Julian III and nine grandkids. Blanche Robertson Bacon, another sister, passed away in 2021.
Mr. Robertson’s generosity extends far beyond the annual distribution of 36 full scholarships to students at UNC and Duke University. He wed Josephine (Tucker) Robertson in 1972 and she passed away in 2010, in her honor, both the Josie Robertson Surgery Center at Memorial Sloan Kettering and the fountain plaza at Lincoln Center were named.
Mr. Robertson admitted that it would “thrill” him to be remembered for his philanthropy, despite the fact that his subordinates sometimes found him single-minded and hyper-competitive. His spokesperson released a statement claiming that, throughout the course of his life, he gave away over $2 billion to various charitable causes.
“I didn’t want my obituary to read, ‘He died getting a quote on the yen at 2 a.m.,'” he insisted emphatically.
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