Robertson’s Contribution to Hedge Funds: Research Intensity

While hedge operators were always stats-oriented, he took data gathering to a whole new level.


The death of Julian Robertson this week marks the passage of one of the pioneers of the hedge fund industry, which now has just under $4 trillion in assets. Robertson, who exuded old-style Southern gentility and a fiery competitive spirit, was notable for his emphasis on deep research, a quality that now embodies hedge operations far and wide.

Robertson “was like a sponge, constantly soaking up as much information as he could,” wrote Daniel Strachman in his biography of the man, Julian Robertson: A Tiger in the Land of Bulls and Bears.During the 20-year run of Robertson’s Tiger Management, which ended in 2000 with his decision to just manage his own money, the hedge operation averaged a 25% return annually.

Hedge funds in 2022 seek to set themselves apart by intensive research, whether their specialties are long/short, macro, commodity-focused or any other iteration. Nowadays, after trailing the S&P 500 during the late great bull market, the funds have shown their mettle once more. Hedge funds in general have lost just 2.7% this year through July, according to Hedge Fund Research. That’s one-fifth the red ink of the S&P 500.

Certainly, hedge funds have always relied on diligent research, starting with the creator of the concept, Alfred Winslow Jones, a former Marxist and all-around iconoclast. In 1949, he launched the first hedge fund, a market-neutral portfolio, using a flurry of statistics. Other now-legendary folks, such as George Soros and Michael Steinhardt, followed.

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But Robertson took things to a new level. In an era before digital databases, he required that Tiger Management, founded in 1980, ferret out facts and figures from far and wide—preferably data that wasn’t easily gettable by rivals. He made a point of overseas investing, at a time when most U.S. money managers preferred to stick close to home.

His approach often involved going against conventional wisdom. In the 1980s, when Japan’s economic growth looked unstoppable and seemed to threaten U.S. hegemony, Tiger did some major numbers crunching. The firm concluded that many Japanese businesses had unsustainable debt loads—and Japan’s stock market had gotten far ahead of itself. So Robertson shorted a bunch of Japanese stocks, and ended up with bonanzas when the Asian juggernaut tanked in the 1990s.

Similarly, Tiger research divined in the mid-1990s that copper prices had soared beyond demand. Suspicious that none of this added up, Robertson bet against the metal. Then news broke that a big trader had hoarded copper to offset some other losses, exploiting the substance’s paper value. The copper market crashed. Tiger cleaned up.

The quintessential Robertson story appeared in Sebastian Mallaby’s “More Money Than God,” a book chronicling the hedge fund industry. When an analyst’s research found that a South Korean car company (unnamed) had a model with a faulty engine, Robertson insisted on more solid evidence, Mallaby recounted.  Tiger then bought two of the cars and had expert mechanics test them. Sure enough, the vehicles were clunkers. Tiger successfully shorted the stock.

Robertson once explained his overall technique this way: “Our mandate is to find the 200 best companies in the world and invest in them and find the 200 worst companies in the world and go short on them. If the 200 best don’t do better than the 200 worst, you should probably be in another business.”

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New York State Pension Loses $26 Billion in Asset Value in Q1

Common Retirement Fund reports 8.24% loss amid volatile markets, rising inflation and war.


The New York State Common Retirement Fund’s fiscal year 2023 got off to a rough start as its investment portfolio lost an estimated 8.24% for the first quarter, which ended June 30, to lower the pension fund’s asset value to an estimated $246.3 billion, according to a news release. The fund’s long-term expected rate of return is 5.9%.

“The first three months of the fiscal year brought upheaval to the financial markets amid Russia’s invasion of Ukraine, rising inflation and supply chain issues that continue to affect the economy,” New York State Comptroller Thomas DiNapoli said in a statement. “The fund’s prudent management and diverse holdings have helped make it one of the best-funded public pension funds in the nation and it remains well-positioned to weather the up and downs of the markets.”

Earlier this month, the pension fund reported a 9.5% return for the fiscal year that ended March 31, when its asset value climbed to $272.1 billion. However, not all of the $25.8 billion in lost asset value is a result of investment performance, as $3.69 billion in benefits was paid out to retirees and beneficiaries during the quarter.

The pension fund altered its asset allocation during the quarter, with the most significant change being a 5% reduction in publicly traded equities, which is not surprising considering the market volatility during the period. The fund used those assets to increase its real estate and real assets allocation by 2.1%; its private equity allocation by 1.36%; its cash, bonds and mortgages by 1.22%; and its credit, absolute return strategies and opportunistic alternatives allocation by 0.32%.

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As of June 30, the pension fund’s asset allocation was 44.7% in publicly traded equities; 22.4% in cash, bonds and mortgages; 15% in private equity; 12.1% in real estate and real assets; and 5.8% in credit, absolute return strategies and opportunistic alternatives.

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