Tiger Global led by Chase Coleman has become known for their strategy focused on investing in less-known companies and startups. They were founded in 2001 and they have a reputation for identifying prospective companies, mostly in the tech, internet, and software sectors. Tiger Global’s portfolio holdings are valued at $16.2 billion, and the company did a major rehaul of its portfolio.
Tiger Global at the moment has 36 holdings in the portfolio while the biggest holdings are Meta Class A stocks, Microsoft, and Apollo Global Management Class A stocks. Other major holdings include Amazon, Take-Two Interactive, and Nvidia (NASDAQ:NVDA). In 2023 they sold several holdings, including Intuit Inc (NASDAQ:INTU), Snowflake Inc (NYSE:SNOW), and Confluent Inc (NASDAQ:CFLT).
Tiger Global and their approach of identifying new trends and fast investing in great prospects worked for them for quite some time. But, in the last 3 years, their performance was mixed, often resulting in losses and investment misses. But, in the fast world of investing this could mean much, but also nothing. To better understand their investment approach, we will review their key holdings, and analyze their strategy.
Key Holdings
- Meta Platforms Inc Class A (NASDAQ:META) with 21.8% of the portfolio
Tiger Global is the biggest holder of Meta stocks, currently owning 7.47 million Class A stocks. The holding is valued at $3.53 billion. Tiger traded their stocks four times in 2023, with the latest trade-in Q4 when they sold 1.43 million shares. The stake in this holding cost about $1.25 billion, which translates into a gain of 182%.
- Microsoft Corp (NASDAQ:MSFT) with 13.30% of the portfolio
One of the first holdings that Tiger Global formed after the fund’s founding was Microsoft’s. Their current stake in the company is 5.34 million shares valued at $2.16 billion. In 2023 they traded their shares 4 times, with two buys and two sells. Tiger Global invested $632 million in Microsoft holding, resulting in a gain of 242% so far.
- Apollo Global Management Inc Class A (NYSE:APO) with 8.53% of the portfolio
Tiger Global is by far the largest owner of Apollo Global Management stocks, with currently owning 12.3 million stocks. The current value of the holding is at $1.38 million, and 2023 saw a major rise in stock price. They moved from an average of $64 to $94, and they are still on the rise in 2024. Tiger Global bought an additional 12 million shares in 2023 solidifying their position. Coleman invested $580 million in this position generating a gain of 139%.
- Amazon Inc (NASDAQ:AMZN) with 5.1% of the portfolio
Amazon is another constant part of the Tiger Global portfolio almost from its beginnings. They now own 4.88 shares valued at $828 million. They timed their buys and sales very well recently. In 2022 they sold the majority of the holding while the price was high, reaching almost $180. In late 2022 and the beginning of 2023, the price dropped to $85 when they piled up Amazon stocks. However, they missed their opportunity to capitalize on gains, selling a bit early at $114, while the price continued to rise to $160. While they invested a total of $149 Amazon Holding generated a gain of 363% so far.
- Take-Two Interactive Software (NASDAQ:TTWO) with 4.87% of the portfolio
The popular game developer is a relatively new holding in Tiger Global’s portfolio. They started trading them in Q4 2022 and they built up the holding to 5.3 million shares. In Q4 2023 they sold 100 thousand shares at $150, leaving them with 5.2 million shares valued at $791 million. They invested a total of $633 million, so this holding generated a gain of 25% so far.
Sector Allocation
Tiger Global’s investment approach heavily reflects its sector allocation. They are investors in innovative companies from the technology sector which can be seen from the allocation of their holdings.
- Technology with 74.2% of the portfolio valued at $12 billion
- Consumer Discretionary with 8.6% of the portfolio valued at $1.39 billion
- Finance with 8.5% of the portfolio valued at $1.38 billion
- Healthcare with 6.1% of the portfolio valued at $988 million.
Tiger Global Investment Philosophy
Tiger Global employs a high-growth investing philosophy focusing on businesses that have a high potential for rapid expansion, thus choosing young companies and startups.
When allocating capital they prefer sectors that have a potential for rapid expansion. Companies from the tech, internet, e-commerce, and software sectors have historically shown those tendencies.
Although in recent times they often choose startups, they also invest in mature companies. What matters is the chance for rapid growth that comes with innovation.
This investment philosophy can be seen in the examples of investments in Facebook back in 2009, making it one of the gems of their portfolio. Also, good examples are Stripe, a global payment processing platform, and JD.com, a Chinese e-commerce giant.
Tiger Global Investment Strategy
Although Tiger Global works as a hedge fund, it also took the approach of venture capital, investing in new businesses that show potential. Like venture capital investors, Tiger Global also acts fast and invests in large portions of company capital.
They have taken even one step further by offering larger checks, at a faster rate with no strings attached. This got them a reputation as one of the largest investors in new businesses and startups.
Unlike other funds that aim to have at least one member of the board, Tiger Global lets the company run its course of business.
When investing in potential you often have to pay a high price for it. Unlike in value investing there is no haggling about price, and Tiger Global often overpays the investment to beat other VC investors.
Another crucial element of their strategy is to constantly invest. Once they detect a company with a potential they go all in. They do not keep their investors’ money doing nothing but use it for new endeavors. This way they avoid sitting on the investors’ money for too long. In 2021 they invested in over 100 companies, raising their AUM to over $50 billion.
This strategy comes with a unique set of risks like overvaluation. No one for sure can determine a business’s potential for growth. If their product or service that was on paper a revolution in the sector, fails to make an impression on the market it can lead to massive losses.
Also, market conditions have a major impact on the company’s performance, and high volatility can create a mess in their portfolio value.
Take A Look At Tiger Global’s Control:
Tiger Global Portfolio Performance Analysis
Tiger Global’s approach is deemed risky, even for the hedge fund standards. They saw massive growth in AUM between 2018 and 2020 when the AUM raised from $18 billion to $52 billion.
They were supposed to conduct fundamental analysis, due diligence, and stress testing to minimize the potential risks.
However, several issues appeared. First, the problems with their investments in the Chinese market were ignited due to the Chinese government’s regulatory crackdown. That came together with some straightforward bad investigation moves.
One of the worst recent moves was the shortening of Tesla’s $500 million stocks, with significant losses. Some of the companies invested in 2021 were massively overpriced, and they were only bringing losses. Tiger Global Management attempted to sell them, but first, they needed to offer the stocks at a discount of 40%-70%.
They reported losses between 20% and 35% in 2021 and 2022. In 2023 several major investors redeemed their investments and diverted their goals towards other investment firms and hedge funds.
In 2023 their AUM fell from $52 billion to $16 billion, and their fundraising goal of $9 billion fell short by 70%. They started to restructure their portfolio and they got rid of most of the deadwood by mid-2023. That shift in strategy earned a comeback in 2023 ending it with a gain of 28.5%.
Investment Process
The start of every investment process is finding a suitable investment target. In a Tiger Global example, it is a bit different, due to their focus on startups and relatively unknown companies.
To know what they are buying they develop a strong network with different company founders, industry sector veterans, and experienced investors. Their insights help them to navigate the busy industrial landscape of innovative businesses.
They use a data-driven approach to track industry trends and identify potential for massive growth. Also, if any data points to a surge in a different industry sector, their focus rapidly switches.
To stay in the loop regarding the current industry trends, they participate in industry-related events and conferences. They use it also as a chance to network and find suitable companies for investing.
Their due diligence process is shorter than average because they often need to act fast. Nonetheless, they conduct a series of analyses to measure the potential of the company. They are actively investigating the competitive landscape, any edge that the company may have, the management team, and economic metrics that can help them identify the right company.
Once the best bets are found they are evaluated by top management. Nothing can be done without extensive checking by everybody involved. Once they decide to invest they are willing to pay high prices just to secure the investment.
After the buy, they enforce a hands-off approach, meaning avoiding getting directly involved in companies’ decision-making. Although they are in regular contact with the executives from all their holdings, just to keep everything in check. Also, they are constantly overseeing their progress and offering companies advice.
Risk Management
Coleman and his partners are well aware of the risks that come with their investment approach. That is why they pay so much attention to an analysis of economic factors before investing. Checking the company’s background, financial records, competition, and sector outlook is essential.
But, often due to the high-speed nature of their investment strategy, they do not spend enough time and resources on risk management. That was especially seen in the period between 2020 and 2023 when they suffered losses due to sometimes harshened investments.
FAQs
How Big Is Tiger Global Portfolio?
The current Tiger Global portfolio is worth $16.2 billion.
Is Tiger Global Management a Hedge Fund?
No, Tiger Global Management is not a hedge fund in a traditional sense. Although it uses the strategies attributed to hedge funds to trade public equity, they are also involved in investing in private equity. This is more relatable to private equity firms than to hedge funds. And to make things even more diverse they are known for their venture capital investing, which is also a rare feat for a hedge fund.
What Are the Largest Positions in Tiger Global Management?
The largest positions in Tiger Global Management are:
- Meta Platforms Inc Class A with 21.8% of the portfolio
- Microsoft Corp with 13.30% of the portfolio
- Apollo Global Management Inc Class A with 8.53% of the portfolio
- Amazon Inc with 5.1% of the portfolio
- Take-Two Interactive Software with 4.87% of the portfolio
- Nvidia Corp with 4.3% of the portfolio
- Eli Lilly and Company (NYSE:LLY) with 4.3% of the portfolio.
Final Thoughts
Although they are not the first or the only, Tiger Global is one of the best examples of a hedge fund aiming for venture capital investing and financing startups with a hands-off approach. They are focused on innovative companies from the tech sector, and they started massively investing in 2020. This led to one of the biggest AUM increases in a single year accomplished by a hedge fund.
But, very soon this tactic proved to be flawed. Some of their “hidden gems” ended up being straight-up losses, and deadwood that needed to be rid of. That resulted in massive losses in two consecutive years, which pulled the majority of investors from the fund.
In the second part of 2023, things started to turn around. Proven players in their portfolio started making solid returns, most of the flawed companies were sold, and the firm could start anew. That resulted in solid returns for 2023, but we still have to wait and see if will that be enough to keep this company afloat.
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