From 1996: Has Julian Robertson Lost His Stock-Picking Magic?VW Staff
Julian Robertson Jr. is warming to his subject. He is bald and burly, over six feet tall, 63 years old, with a deep, booming North Carolina drawl. The subject is stocks, and Julian Robertson is alive, animated. Uni Storebrands. Ever heard of it? Robertson has. And how. It is his largest holding–an obscure Norwegian insurance company. He’d like to buy more, but local regulations forbid it. Swiss Reinsurance Co. is another favorite. So is Harrah’s Entertainment Inc. Citicorp? Absolutely. Japanese banks are another matter. “The worst in the world,” he says flatly.
Stocks are what turned Julian Robertson from an obscure broker-turned-money manager into a power in the world markets. Robertson is the founder and chairman of Tiger Management Corp., Wall Street’s global-investing powerhouse. George Soros may be the savant of the currency markets, but when it comes to stocks, Julian Robertson is the master–poised, ivory-towerish, in a top-floor, glass-walled office on Park Avenue. And even as a global currency-trading “macro” player, he could give Soros a run for his money. Year after year of brilliant returns lured the high-octane investors–at $5 million or more a head–who turned $8 million in 1980 into $7.2 billion in 1996. Robertson was ahead of the curve on every major trend in investing, from the surge in European equities that followed the fall of the Berlin Wall to the tumult in the global bond markets in 1992 and 1993.
Robertson was the reigning titan of the world of hedge funds–the secretive, often highly leveraged private investment partnerships that are the piggy banks of trust funds, endowments, and millionaires. Robertson assembled a team of the smartest and best-paid stock-pickers on Wall Street–a “Super Bowl team,” as his friend and adviser, Dr. Aaron Stern, puts it.
At his peak, no one could best him for sheer stock-picking acumen. Robertson was the Wizard of Wall Street. And he was paid well for it. In 1993, his compensation and share of Tiger’s mammoth gain probably exceeded $1 billion.
But something toppled him from that pinnacle. It all began with a disastrous first quarter of 1994. In contrast to a stunning 1993, when Tiger’s funds gained 80% before fees, his funds declined 9%. Investors, who had poured money into Tiger in 1993, began to pull out. In 1995, as still more investors defected, he eked out a pre-fee gain of 17%, a humiliating 20 points below the Standard & Poor’s 500-stock index. And even though Robertson began to do well again in 1996, climbing 17% in January, his gains soon were cut almost in half–and his revival has all the makings of a bump on a downward slope. On one horrible day, Mar. 8, Tiger sustained a $200 million loss, as a bet on U.S. Treasuries turned sour.
Nothing seems to have helped, not more analysts, not the addition of Morgan Stanley & Co. managerial whiz Lewis W. Bernard. Not even Stern, a prominent psychiatrist and management consultant, has restored the magic that is fast becoming a memory.
How did the best record in the world of investing turn so dreary? Getting the answer to any significant question at Tiger has long been nearly impossible, for that glass-walled perch on Park Avenue might just as well be one-way glass. Robertson rarely grants interviews, and former employees are afraid to speak about him, even off the record.
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