Tiger Veda Management, a so-called “Tiger Cub” hedge fund, is shutting down after 11 years, according to a memo sent to clients from the fund’s CEO.
The fund will return 80% of the capital on December 31, the memo dated November 27 said. The remainder of the capital will be returned at the end of the first quarter of 2016.
Manish Chopra launched Tiger Veda in 2005 after leaving Julian Robertson’s Tiger Management. Robertson, the original “Tiger,” has seeded a number of hedge funds.
At the end of the third quarter the fund was valued at around $280 million, according to a 13-F filing.
In the memo, Chopra expressed his frustration with finding “meaningful” long investment ideas in this bull market.
“Finding a new ‘value’ long investment has become a needle in a haystack process, and low hanging fruit are few and far between, ” Chopra wrote.
“Market wide, value stocks are of parochial interest and have far underperformed the more sexy growth, and levered & re-levered names. Value investments have become better bargains as each day passes, existing in the purgatory of ‘value trap’-land.”
Chopra continued to explain that their long bias led them to hold “far more cash than we would like.”
“I viewed this cash holding as a wellspring of future outsized returns post the inevitable sell offs after exuberant markets caved in. We have witnessed and executed on this over the last five years, when we deployed cash balances to buy when others were selling and intrinsic value presented itself at a discount.”
“Our long bias with lower gross exposure strategy evolved in conjunction with a rising equity market post 2009, as shorting stocks became a different game than when we launched the fund. Today it is betting against the house, with fellow hedge funds, corporates, bankers and governments, all being inimical to profits. With cash balances increasing even above recent history in 2015, we have disabused ourselves of the notion that we are best served to wait it out patiently.”
Those things are what led Chopra to close the fund. The decision to close did not sound easy either.
“While making this decision, I’ve sometimes felt like the Buddhist who after carefully and patiently creating his elaborate sand mandala over a lengthy period of time, destroys it in a matter of minutes.”
A call seeking comment from Tiger Veda was not immediately returned.
ValueWalk was the first to report about the fund’s closure.
Here’s the full letter:
Dear Partner,
After close to eleven years of managing Tiger Veda, and twenty years in the hedge fund business, I have decided to close the Funds. This was a difficult decision for me, but a confluence of factors confirms that this is the right time for this action.
In anticipation of closing the Funds, we have largely completed the liquidation process and plan on returning approximately 80% of capital on December 31st, and the balance shortly thereafter, with the final date of March 31st, 2016. I will keep you updated periodically throughout this process.
I have been frustrated by the paucity of meaningful long ideas in a bull market nearing the completion of its 7th straight year. Valuations are efficient or ebullient with little room for error priced in, even as risks to global economic growth build up. Finding a new ‘value’ long investment has become a needle in a haystack process, and low hanging fruit are few and far between. Market wide, value stocks are of parochial interest and have far underperformed the more sexy growth, and levered & re-levered names. Value investments have become better bargains as each day passes, existing in the purgatory of ‘value trap’-land. Because of our long bias this has led us to hold far more cash than we would like, and more than we have done so for the previous decade. I viewed this cash holding as a wellspring of future outsized returns post the inevitable sell offs after exuberant markets caved in. We have witnessed and executed on this over the last five years, when we deployed cash balances to buy when others were selling and intrinsic value presented itself at a discount. Our long bias with lower gross exposure strategy evolved in conjunction with a rising equity market post 2009, as shorting stocks became a different game than when we launched the fund. Today it is betting against the house, with fellow hedge funds, corporates, bankers and governments, all being inimical to profits. With cash balances increasing even above recent history in 2015, we have disabused ourselves of the notion that we are best served to wait it out patiently. This realization along with a few other personal and business related factors have all contributed to my decision to return capital.
I consider our investors to be true partners, and as such built a meritocratic organization with an ethos of disciplined process, transparency, accountability, a focus on critical thinking, and quality independent research. I have learned a great deal from all of you. I very much appreciate your candor and your desire to know what you own, as well as your willingness to test us on our assumptions and encourage us down the path we took together. While making this decision, I’ve sometimes felt like the Buddhist who after carefully and patiently creating his elaborate sand mandala over a lengthy period of time, destroys it in a matter of minutes. That action is performed with a view of manifold long term benefits, and I similarly expect the same with this decision. Many of our partners have become wonderful friends during this journey, and that has truly been the icing on the cake. Thanks also to the Big Tiger and his cubs for including us in the den. I look forward to staying in touch.
With humility and gratitude,
Manish
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