Who is the greatest hedge fund manager of all time?
Many have wondered and many click-bait articles have been written.
But I’m here to finally settle the debate.
As long time readers of mine know, I love to pay attention to what the top funds are doing at any given time.
For the past 30-plus years, it’s how I’ve found valuable insights into what assets and sectors were underpriced and set for substantial long-term returns.
And today we’re going to do exactly that. We’re going to look at the greatest fund manager on Wall Street today and dig into what his empire is buying.
The Clear Cut Greatest Hedge Fund Manager of All-Time
People often make a case for some of the old school commodities and futures guys like Bruce Kovner, Michael Marcus, or Richard Dennis. These guys shot the lights out for a long time with breathtaking returns.
Let’s not forget Ed Seykota as well with what is said to be a 30-year average annual return of 60%.
The problem is that these guys are traders. And while they have given interviews over the years, explaining their methodology, if you think they have given you the secret sauce you are mistaken.
Stanley Druckenmiller has to be considered. Working at Duquesne Capital and alongside George Soros he has earned very high returns for a very long time.
The problem is that cloning only his stock picks would have barely beat the market. It is bets like the recent ‘short treasury bonds, long commodities’ positions he talked about in a recent interview with Goldman Sachs that provide the big kick to his return.
He doesn’t have to disclose those and most of us don’t have futures accounts anyway.
You can make a case for Michael Steinhardt, George Soros, Paul Tudor Jones or Marty Zweig being the best of all time, or at least in the discussion about top 5 of all time.
But no. The clear-cut winner is Julian Robertson.
The Tiger King
If you weren’t around in the 1980s and 1990s you may not even know who Julian is or how he performed.
I was, and I can tell you that if we ever thought Julian Robertson was steering his Tiger Management Fund in a certain direction, we would jump on the train as soon as possible.
Julian launched Tiger in 1980 and is considered by some to be one of the founding fathers of the modern hedge fund industry. Like most hedge funds of that era, Julian was fairly secretive about his returns each year, but the numbers I have heard from people who are in a position to know have said that he averaged as much as 32% during that time with as much as $22 billion in assets under management.
His value style though did not do as well in 1998 and 1999 as the tech bubble soared to impossible heights. He closed Tiger and began to focus on mentoring others to learn to trade and invest in his global macro long/short framework.
It is work with these ‘Tiger Cubs’ that make Julian Robertson the greatest hedge fund manager ever. Not since Ben Graham birthed the denizens of Graham and Doddsville have so many great investors tracked their skill and success to one man.
Robertson seeded dozens of hedge funds including John Griffin of Blue Ridge Capital, Lee Ainslie of Maverick Capital, Andreas Halvorsen of Viking Global, and Steve Mandel of Lone Pine Capital.
Now the cubs are producing cubs of their own who are running very successful hedge funds, venture capital firms and private equity businesses.
Several of them, like their predecessors and mentors, are shooting the lights out.
That’s not to say that the founding father, or grandfather if you will, has lost his touch. Julian Robertson still runs Tiger Management, but this time around it’s just his money.
By studying Julian Robertson and his cubs, there are a lot of ways to make money. What these wildly successful protégées are buying and selling can give us clues where we want to focus our endeavors.
Keep in mind, according to a recent shareholder letter from Tiger Global’s Manager, Chase Coleman (the most successful cub so far), has used Robertson’s core philosophy of seeking to identify the best companies that will benefit from the most important growth trends while shorting companies on the wrong side of change.
The combined makeup of the cubs portfolio just might give us some valuable information about what is going on in the world.
We are going to dig into the Tiger cubs strategies and how we can use them as our free research department in our next article, but first let’s take a look at what Julian is doing with his personal money.
Julian Robertson’s Top Holdings
Unlike what Wall Street may have thought back when Julian Robertson originally liquidated Tiger and closed it to outside money, the 81-year-old has not lost his touch. Buying Julian’s top ten holdings, from when he had to start filing a 13F again back in 2009, would have earned you more than 20% annually.
Plus, he has had a red-hot hand the last three years with annual returns of about 33%.
Let’s look at what those top ten stocks are as of December 31st 2020.
- Adaptive Biotechnologies Corp (ADPT)
Adaptive is a commercial stage biotech company that is working with the idea of using the body’s adaptive immune system to transform the diagnosis and treatment of disease. The company recently got approval from the FDA for emergency use of their T-cell COVID-19 test. The company hopes to develop a host of T-cell based diagnostic tests and the COVID approval is seen as a proof of concept.
- AerCap Holdings N.V. (AER)
AerCap is the world’s largest aircraft leasing business. They have more than 1000 owned or managed aircraft in their portfolio. AerCap serves over 200 airlines in approximately 80 countries. That’s going to change as they just agreed to buy GE’s aircraft leasing business, which will bring the fleet up to over 2000 aircraft.
- Facebook Inc (FB)
Facebook may face some challenges from Congress but they dominate social media and control a significant portion of the US advertising market.
- Blackstone Group (BX)
We talk about Blackston a lot here at Thunderclap Research. It is one of the largest private equity and alternative asset management companies in the world. It’s hard for me to argue with this pick since I love the PE space and first suggested buying this stock back in 2016 at less than $30 a share.
- Microsoft (MSFT)
Nothing else needs to be said. It’s Microsoft.
- Micron Technology (MU)
Micron Technology is a manufacturer and marketer of semiconductor devices. There is a massive chip shortage that is going to take some time to work off. It seems like computer chips are in everything but condoms and breakfast cereal these days so this is just going to continue being a great business.
- SLM Corporation (SLM)
Also known as Sallie Mae, SLM is engaged in the business of originating, servicing and collecting student loans. This is a business with a cloudy future due to promises made by some politicians but I have my doubts we ever actually see widespread student debt forgiveness. I prefer to see private effort to pay tuition like we saw from Ken Langone at NYU and Robert Smith at Emory but in the meantime Sallie Mae has very high returns on assets and equity.
- Qualcomm (QCOM)
Qualcomm is the world’s leading wireless technology innovator. The combination of 5G and this company’s patent portfolio is going to continue to drive outstanding long-term growth.
- Alphabet Inc. Class C (GOOG)
Like Microsoft I think this stock speaks for itself.
- Controladora Vuela Co de Aviacion S.A.B. de C.V. ADR (VLRS)
The Mexican airline also known as Volaris, VLRS is a discount airline that offers unbundled pricing similar to Frontier or Spirit (SAVE) here in the U.S. The airline had a good year last year and analysts expect even better results this year.
Should You Buy Julian’s Top Holdings?
It has been just about 3 months since the end of the 4th quarter of 2020. It has been almost six weeks since the filing was released.
My backtested results are based on buying Julian’s holdings within 24 hours of the 13f Filing at the SEC.
Some of the stocks have gone up since then. Some have gone down.
One did a tender offer that spiked the stock price by 50%.
Some have reported earnings that have changed the outlook for the company.
If you were planning to run out right now and buy an index fund or some weird ETF with all your cash, then yes, buying Julian’s top holdings is probably a better bet.
But although looking into what top investor’s holdings are can be useful for pirating ideas, it is necessary to do further research to know which ones to buy.