GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

How Chase Coleman Made 45% in 2011 by Betting on LinkedIn, Zynga and Facebook!

January 10, 2012 | About:
gurufocus

gurufocus

350 followers
Charles Payson Coleman III, known as Chase, is as close as one gets to American aristocracy. A descendent of Peter Stuyvesant, the last Dutch governor of New York, Coleman was raised in Glen Head, a posh enclave on New York's Long Island. He went to Deerfield Academy in Massachusetts and then, like his father and grandfather, attended Williams College, where he played lacrosse. He graduated in 1997 and went to work as a technology analyst for Julian Robertson, a godfather of the hedge-fund industry, at Tiger Management LLC, Bloomberg Markets reports in its February issue.

Coleman had a connection at Tiger. He had grown up with Robertson's son, Spencer, who lived in nearby Locust Valley.

Soon after Robertson, 79, closed his fund in 2000, he handed his son's former playmate more than $25 million to manage. Coleman was 25 at the time. That made him one of at least 30 so-called Tiger cubs -- fund managers who are Tiger Management alumni. There are another 40-odd so-called Tiger seeds -- funds backed by Robertson dollars.

Coleman and his Tiger Global LP, along with a half dozen others, are both.

Chase Coleman has been handed a lot in his life, and he's made good with the gifts. He took his Robertson stake and built a $10 billion firm, partly by investing in Internet companies before they sold shares to the public. These days, he owns, among other things, a stake of undisclosed size in social networking phenomenon Facebook Inc. and another in Zynga Inc., creator of the Mafia Wars and FarmVille online games.

Zynga raised more than $1 billion in a Dec. 15 initial public offering.

45 Percent

Coleman's flagship $6 billion Tiger Global fund returned 45 percent in the first 10 months of 2011, putting it at the top of the Bloomberg Markets list of the 100 best-performing hedge funds managing $1 billion or more. He manages the fund with Feroz Dewan, a Princeton University-educated engineer and mathematician.

"I have known Chase since he was a small boy," Robertson wrote in a statement. "He's a great competitor and an immensely gifted portfolio manager. I would always bet on Chase."

Joining the Tiger team takes more than good breeding and connections. Robertson used to give prospective hires a written test to gauge their intelligence, competitiveness and ability to work on a team. Tiger Management, which still exists to invest money for Robertson's family and a few outsiders, uses a similar exam to find managers to seed, a person familiar with the test says.

Robertson Acolytes

Tiger cubs learned at the right hand of Robertson, who vetted almost every idea before it became a trade, the person says. Robertson prized on-site research and once sent a commodity analyst to Brazil to estimate the number of coffee bushes under cultivation in the eastern state of Bahia before betting that the commodity's price would decline.

Most of the Tiger seeds are housed in Tiger Management's offices on the 47th and 48th floors of 101 Park Ave. in midtown Manhattan. Robertson is the landlord, charging each fund rent. He also takes an ownership stake, which entitles him to a cut of the hefty fees that hedge-fund managers charge investors.

Managers of the seed funds meet periodically to discuss ideas, says a person familiar with the meetings. Robertson also encourages managers to share their wealth through the Tiger Foundation, which gives money to organizations helping needy families in New York.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/09/bloomberg_articlesLXK0KR0YHQ0X.DTL#ixzz1j3J1APJa

About the author:

gurufocus
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.4/5 (24 votes)

Comments

Matt Blecker
Matt Blecker - 2 years ago


Gurufocus is a great site. But the worshipping of hedge fund managers like Coleman through articles like this is troubling. Do articles like this add value for members of the site? Do Coleman's investments in start ups and his wealthy upbringing and connections really prove he is a skillful investor? His actions show he is more of a momentum investor, adding to positions like Netflix, Amazon, etc.... at very high valuations. Perhaps a lot of luck is involved?
AlbertaSunwapta
AlbertaSunwapta - 2 years ago
I find such articles informative. And yes, his investments on startups might prove that he is a skillful investor.

If you were to take any early, even pre IPO investor in companies like Microsoft, google, apple, etc. that found these companies to be well within their circle of competence, you might find them adding to their positions at numerous seemingly overpriced levels. Looking back though, would you say those investors were just momentum investors? It's pretty hard to judge a fund manager based on the manic-depressive nature of the market. I don't know where he bought Netflix but in a year or two or ten, its previous high may seem like a reasonable price.

We have to remember that just because someone invests in a rapidly growing enterprise they are not necessarily 'growth' / momentum investors. As Buffett, Miller and others have said, growth and value are two sides of the same coin.
Matt Blecker
Matt Blecker - 2 years ago


Stating his short-term return and salivating over Julian Robertson, i.e. "Godfather" does nothing for members of this site. When a shareholder letter is posted which goes into detail regarding new buys, existing holdings, as well as the manager's philosophy, process, and opinions, that is adding value. But this article does nothing of the sort, only worships.

So a rich kid knew a friend with an even wealthier hedge fund father who gave him money to invest. Awesome! At least we know his middle name is Payson. Very informative. Lol.

No mention of why he bought certain securities and the reasoning behind the purchases.
Benvalue
Benvalue - 2 years ago
In 10 years no one will even remember what Linkedin was except for the speculators who get burned on this one.
tkervin
Tkervin - 2 years ago
......and in ten years no one will remember Squire Chase. How do these trust fund kids come up with such preppy names?

Of course if these firms had gone public in 2000 or 2008 and Chase had "Bet" then.......the moral of the story would have a different twist.......but in the end it's not Chase's money is it?
Benvalue
Benvalue - 2 years ago
"He built a $10 billion firm, partly by investing in Internet companies before they sold shares to the public."

Forgot to add "Soon after the public got burned."

LinkedIn Corporation Class A Co

(NYSE: LNKD )

































Last Trade:[b]66.01






























52wk Range:


60.14 - 122.70
P/E (ttm):904.25
EPS (ttm):0.07
Div & Yield:

N/A (N/A


AlbertaSunwapta
AlbertaSunwapta - 2 years ago
I admire Buffett above all others because of his desire to find, buy and hold long term profitable companies and positions. That doesn't mean that I can't include traders in the universe of skillful investors. Buffett himself has engaged in numerous arbitrage situations. Numerous successful strategies (piotroski, can slim, etc.) and gurus appear to take action around aspects of momentum, earnings release and other behavioral or price discovery catalysts.

The posters above seem to be reacting emotionally to the news of this guy's 'pedigree'. I see it as noise and not something to react to or to allow to taint a performance record yet to be established. Hey, for all I know, the DNA that brought his forefathers here, may still be in his system, somehow benefitting his decisions,
Matt Blecker
Matt Blecker - 2 years ago


AlbertaSunwapta,

Your points re: Buffett are well taken. I agree.

But I would describe this whole article as "noise." I don't care about Chase's middle name or his short-term performance. How about describing his reasoning behind these positions. This article does nothing to educate members of the site and could have easily been read on CNBC.com.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK