2014 and early 2015 was a great time for Nehal Chopra, recently named an Institutional Investor Rising Star, the former Tiger Seed’s hedge fund Tiger Ratan Capital Management had received a $25 million investment in 2011 from investing legend Julian Robertson himself (subsequently the amount grew to $100 million) and after a series of impressive annual returns, including three straight blockbuster years, gaining 26.3% in 2012, 46.8% in 2013 and 22.3% in 2014, she was running a whopping $1.4 billion by June 2015.
The financial press would not stop fawning over Chopra.
Here is what Economic Times wrote about her in late 2014:
Nehal Chopra has been sprinting ahead of the pack most of her life. She became a top-ranked youth tennis player growing up in Mumbai, and received an MBA from Wharton while most of her peers were getting their bachelor’s degrees Before she was 30, she persuaded billionaire Julian Robertson to seed her hedge fund firm Ratan Capital Management. Since 2009, Chopra has averaged 19 per cent annual gains by betting on companies in upheaval, almost triple the industry average. To her supporters, including Robertson, she’s a brilliant stock picker.
Chopra pitched Robertson after meeting him at charity events. The billionaire was impressed by her academic pedigree and tennis prowess. After growing up in Mumbai, where she attended Fort Convent and Sydenham College, Chopra graduated in 2002 from Wharton.
In short order, she made countless other financial outlets including both CNBC…
… and Bloomberg TV, where she appeared on Tom Keene’s show alongside Robertson himself.
That appearance, however, was her personal “top tick”, because shortly thereafter, everything started going very wrong for Chopra, who as it later emerged was heavily invested in a handful of “hedge fund hotel” stocks, many of which were about to suffer spectacular losses.
After posting a 15.5% return in the first quarter of 2015, the fund collapsed – largely a function of the implosion of VRX – eventually producing a 19% loss for the year, a swing of more than 34% points in just nine months. As Institutional Investor reported, the fund continued to implode in the first half of 2016 when it suffered a 51.59% drawdown from May 2015 through June 2016.
As we previously reported and as II notes, like many of the Tiger Cubs and Seeds, Ratan runs a concentrated portfolio but Chopra always took it to a much greater extreme, with Ratan typically owning just seven to nine individual stocks.
Think Bill Ackman. And just like Ackman, Ratan was mauled by its huge bets on drug companies Valeant and to a lesser extent, Allergan, which started to suffer big losses in the middle of 2015. They accounted for 35% of assets at the end of June 2015, just before the two stocks, especially Valeant, went into their tailspins. Valeant fell 75% in the first quarter of 2016 alone. At the end of Q2 2016 of last year, Ratan liquidated four positions, including Valeant and Allergan.
By the third quarter of 2016 Ratan liquidated four positions again, including two major holdings: Starz, the cable television network that was the firm’s third-largest position, and bottler Coca-Cola European Partners.
By the end of the fourth quarter Ratan was much more diversified, holding 20 individual stocks, a lot for the firm. All but six were new positions.
However, it was too little, too late for none other than her original sponsor, and as Institutional Investor reports, Julian Robertson told investors in the Q4 of last year that he was redeeming his money from Chopra’s Tiger Ratan Capital Master Fund.
Ratan confirmed this in a recent regulatory filing.
In 2016, Tiger Partners, LLC and Tiger Accelerator Seed Holdings, L.P. (“collectively, Tiger”) fully redeemed its investment in funds advised by Ratan and terminated its “seed” arrangement with Ratan. Ratan no longer shares revenues or any economics with Tiger.
Tiger Ratan has even dropped the “Tiger” name from its funds.
In its SEC filing, the firm reported having $375 million in regulatory capital, an inflated figure which includes leverage and notional values of derivatives. At the end of 2016, Ratan’s U.S. stock portfolio was valued at $165 million, up modestly from $135 million the previous quarter, and down over $1 billion from the $1.4 billion in AUM as of the summer of 2015.
The firm also disclosed in the filing that it currently has just four employees. It is not clear if it can afford any more employees with such a modest AUM. It was also not clear if this is the first time Julian Robertson has “disowned” a former Tiger Seed and if his departure will prompt the rest of her LPs to follow suit.
via http://ift.tt/2ncssTZ Tyler Durden