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This is an ongoing story;
>From: LePatron@xxxxxxxxxxxxxxxxxxx
>To: trdoptions@xxxxxxxxxxx
>Subject: The Street.com-Redemption Rumors: Another Bustle in Julian
>Robertson's Hedgerow
>Date: Sat, 7 Aug 1999 16:41:53 -0400
>
>Le Metropole members,
>
>Another story on Tiger and a clarification from me.
>
>The "Big Boys" know that any financial entity or any
>individual that is under financial pressure, sells what
>they can first - for liquidity purposes and just to
>satisfy the counterparties.
>
>The real problems start with the illiquid portions of the
>portfolio. They go last.
>
>The "last man in" investors are stuck with those positions.
>From experience, The "Big Boys" know what happens to
>the investors that stick it out to the last. It is
>not a pretty sight.
>
>When "The Cafe" came out with that 6 billion
>redemption number that is "coming", it was with that
>thought in mind. We did not mean to infer that our
>sources said it would "only" be a "single" redemption.
>
>Take it away: The Street.com
>
>
>Redemption Rumors: Another Bustle in Julian Robertson's Hedgerow
>By Aaron L. Task and Erin Arvedlund
>Staff Reporters
>8/6/99 6:54 PM ET
>
>
>
>The rumor mill continued to churn today, with
>market players speculating Julian Robertson's Tiger
>Management is facing up to $6 billion in redemptions.
>Some credit-market players suggested yesterday's
>shenanigans in the swap market were the result of the
>fund having to raise cash in a hurry. Separate rumors
>of a staff exodus at the macro-style hedge fund were
>also circulating.
>
>A $6 billion redemption would cut Tiger's asset base
>off at the knees. The New York-based hedge fund has assets totaling
>anywhere from $10 billion to $12 billion, according
>to Bruce Ruehl with Tremont Advisors, a fund of funds
>in Rye, N.Y, and an investor in Tiger. However, a large
>portion of the hedge fund's capital is subject to l
>ock-up agreements, Ruehl said, suggesting a redemption
>of that size is highly unlikely, if not impossible.
>
>As for the issue of Tiger's staff, employees are
>"typically given two-year contracts when they start
>at $1.5 million a year," according to one hedge fund
>manager who requested anonymity. "After two years they
>are paid based on performance through a pool, which
>vests over five years. What I heard was, in light of
>the fund's recent performance, employees up to that
>first two-year mark are bolting."
>
>Robertson has done some sort of flip-flop on divvying
>up money to managers, but there is no mass staff
>exodus, according to an investor.
>
>Alone and an Easy Target
>Because of its size, Tiger is easy prey for the
>rumor mill, several hedge fund traders said as they
>dismissed today's talk. Robertson reportedly called
>the redemption rumors "obscene," according to the
>aforementioned hedge fund manager, citing contacts at Tiger.
>
>However, there are legitimate concerns. Despite
>what has been a legendary track record , Robertson
>has had a tougher go of it of late. Since the s
>tart of July 1998, Tiger is down 40%,
>according to Tremont estimates.
>
>"They haven't mounted much of a comeback over
>that time," Ruehl said. "But this is a rough year
>for macro funds, a unique year, even though the
>yen-dollar trade came back. It likely is not as
>big a percentage of every macro hedge fund's
>portfolio. And in a month like July, some of
>Tiger's equity positions went against them,"
>including US Airways (U:NYSE) and Waste Management (WMI:NYSE).
>
>The hedge fund source agreed that $6 billion in
>redemptions was hard to fathom, "but that doesn't
>mean they're not in a bunch of bad trades."
>
>The source noted Robertson "talked up" his US
>Airways earlier in the week. "All of a sudden,
>now the airline company has to enhance shareholder
>value. Why? Because [he's] losing on all his other trades."
>
>In addition to Waste Management and US Airways, the
>source said Tiger's performance has also been battered
> by big holdings in Countrywide Credit (CCR:NYSE),
>Providian (PVN:NYSE) and Capital One Financial
>(COF:NYSE). Each is down considerably from
>its 52-week high. (See chart.)
>
>Paper Tiger
>Key Tiger holdings show a declining trend
>
>Source: Big Charts
>
>
>Additionally, an individual investor in Tiger said
>he'd received word from the firm that Tiger was
>closing to new investors -- i.e., that the hedge
>fund did not accept any new money in July and
>won't do so in August either. "The idea, I guess,
>goes something like this: They don't want to
>disappoint people who might put their money in
> this year," said the investor, who asked not
>to be identified.
>
>Nevertheless, "this does not imperil the survival
>of Tiger," Ruehl said.
>
>Meanwhile, another hedge fund manager said Tiger's
>woes -- rumored or actual -- portend poorly for
>the broader market.
>
>"Tiger's been having trouble with both investors
>and staff for a while now, so this is nothing new,"
>said Aron Thompson, president of Infinity
>Investments near Seattle. "However, what may have
>happened is that things got worse for him with the
>nosedive in markets. But this isn't simply a Tiger
>problem: It will be a hedge fund industry problem,
>and probably sooner rather than later. They aren't
>making enough money (or in some cases, are losing
>too much money) to justify that they exist. When
>you take out 1% to 2% per annum for management
>and 20% of profits, you'd better be good -- you'd
>better be better than good."
>
>Thompson further speculated that hedge funds may
>"deflate" before the market does. But lately, it's
>looked like a classic chicken-and-egg conundrum.
>
>A Tiger spokesman was not immediately available to comment.
>
><A HREF="http://www.lemetropolecafe.com/scripts/products.cfm";>Le Metropole
>Cafe</A>
>
>All the best,
>
>Bill Murphy
>Le Patron
>
>
>
>
>
>
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