Lessons from Julian Robertson

Julian Robertson, the legendary founder of Tiger Management, left an indelible mark on the world of finance, not only through his stellar returns but also by mentoring a generation of successful hedge fund managers known as the "Tiger Cubs." His investment philosophy, a potent blend of deep fundamental analysis, bold conviction, and a disciplined long-short approach, continues to influence investors today.

On Investment Philosophy and Strategy

"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." [1] This quote encapsulates the essence of his long-short equity strategy, which was central to Tiger Management's success.
"Smart idea, grounded on exhaustive research, followed by a big bet." [2] This highlights his high-conviction approach to investing, emphasizing that deep diligence should be followed by decisive, significant capital allocation.
"Hear a story, analyze and buy aggressively if it feels right." [2] This speaks to his willingness to act decisively when an investment thesis, supported by research, resonates with him.
"Avoid big losses. That's the way to really make money over the years." [3] A fundamental tenet of his approach was capital preservation, understanding that avoiding significant drawdowns is crucial for long-term compounding.
"I believe that the best way to manage money is to go long and short stocks." [2][4] Robertson was a staunch advocate for the long-short model as a way to generate alpha and manage risk.
"For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood." [2] This provides his specific and multi-faceted criteria for identifying short-selling opportunities.
"Hedge funds are the antithesis of baseball. In baseball, you can hit 40 home runs on a single-A-league team and never get paid a thing. But in a hedge fund, you get paid on your batting average. So you go to the worst league you can find, where there's the least competition." [2] This memorable analogy underscores his strategy of seeking opportunities in less crowded and inefficient markets.
"It is easier to create the batting average in a lower league rather than the major league because the pitching is not as good down there." [3] A direct extension of his baseball analogy, this quote emphasizes the value of operating in under-researched areas.
"I suppose if I were younger, I would be investing in Africa." [3] This quote, from his later years, illustrates his forward-thinking approach and his belief in finding the next frontier for investment.
"We try to learn a lot about [the companies], we try to talk to their competitors, their managements." [5] This points to the depth of his firm's research process, which included gathering intelligence from a wide network of sources.
Focus on Quality Companies. Robertson's philosophy centered on investing in companies with strong fundamentals, a competitive advantage, a solid management team, and a robust financial position. [4]
The Importance of a Long-Term Vision. He believed that patience and discipline were paramount to success, and he was not afraid to hold investments for extended periods to allow their true value to be realized. [4]
Contrarian Positions. Robertson often took positions against the prevailing market sentiment, most notably by refusing to invest in overvalued technology stocks during the dot-com bubble. [6]
Never Double Down, Always Double Up. A lesson highlighted by his mentee Mark Yusko, Robertson believed that if a stock went against you, it was a signal you were wrong. Conversely, when a stock was working, he would add to the position. [7]
Focus on Fundamentals, Not Short-Term Trends. He emphasized analyzing a company's balance sheet, cash flow, and income statement rather than being swayed by fleeting market sentiment. [4]
Global Investing is Not Optional. "Some may think it ambitious that we are determined to be global investors. We think any other approach would be shortsighted." [5]
The Trigger Puller. Robertson was known for his decisiveness. He believed that dithering over investment decisions could lead to significant losses. [2]
Bet on Great People. "I'd say if you have an idea that company management is comprised of really great people, you should look hard at that stock." [8]
Recognize When You Don't Understand a Market. In 2000, when closing Tiger Management to outside investors, he famously stated, "There is no point in subjecting our investors to risk in a market which I frankly do not understand." [5]
Look for High Free Cash Flow Yields. "I like stocks with very big free cash flow yields." [5]

On Markets and Opportunities

"You hear these people on television saying the market has told them this and that – well, the market has never spoken to me." [5] A classic Robertson quip, this quote dismisses the idea of the market as a monolithic, communicative entity and underscores his reliance on independent analysis.
"I'm actually sort of shocked by the totally unanimity of bearishness today - it's the most bullish thing I can think of." (December 2002) [5] This demonstrates his contrarian nature and his ability to see opportunity where others saw fear.
"We aren't that worried about the market, the reason being that everybody else is worried about it." (August 1989) [5] Similar to the previous quote, this highlights his tendency to go against the crowd.
"The technology, Internet and telecom craze" was a "Ponzi pyramid destined for collapse." [9] His prescient and ultimately correct view on the dot-com bubble, even though it hurt his performance in the short term.
"In a rational environment [our] strategy functions well, but in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned does not count for much." [5] His reflection on the challenges of value investing during the dot-com bubble.
"It is amazing how in the rest of the world no one really seems to care about profitability." [5] A comment on the market's periodic disregard for fundamental metrics.
"We had a field day before anyone knew anything about shorting. It was almost a license to steal. Nowadays, it's a license to get hosed." [10] A reflection on how the investment landscape, particularly short-selling, has become more competitive over time.
"Hedge funds are other hedge funds' toughest competition. And there are just more of them, and it's tougher and tougher all along." [10] An acknowledgment of the increasing difficulty of generating alpha in a crowded field.
On Gold: "I don't believe in gold... I think it's a psychological store of value and I think that probably a psychiatrist is better able to analyse gold than I am." [10]
On the Cruise Industry: "I think the cruise industry has come of age. And older people my age are attracted to the cruise ship industry. And they are booming right now, and all over the world they are booming." [10]

On People, Mentorship, and Life

The Importance of Mentorship. Robertson's greatest legacy is arguably the "Tiger Cubs," the many analysts and portfolio managers he mentored who went on to launch their own highly successful hedge funds. [11]
"Probably the best thing I've ever done was start the Tiger Foundation." [12] This reflects his deep commitment to philanthropy and his desire to instill that value in his employees.
"When you manage money, it takes over your whole life. It's a 24-hour-a-day thing." [3] A stark reminder of the all-consuming nature of a career at the highest levels of investment management.
"You never make a mistake by seeing people with brains." [5] This speaks to his focus on hiring and surrounding himself with intelligent and talented individuals.
The Power of a Network. Robertson built a formidable research engine by combining the deep analysis of his talented team with his own extensive network to source and cross-reference ideas. [9]
"It's a people business." Robertson structured his firm to play to his strengths as a leader and networker, emphasizing collaboration over a solitary approach. [9]
On Peter Lynch: He "missed one thing: He wasn't having fun. He didn't get people to help him." [9] This highlights Robertson's belief in building a team and enjoying the process.
"I have always regrets about selling anything of Reed Hastings because he's really a good manager and a great capitalist." [10] A testament to his admiration for exceptional corporate leadership.
"Anybody that doesn't like Netflix, that's like saying you hate Santa Claus." [10] A more colorful expression of his positive view on the company and its leadership.
"I just don't believe bad guys do well in the long run." [10] His rationale for being skeptical of Steve Jobs and Apple in the early days, a belief that good ethics and long-term success are intertwined.
On Philanthropy: "I came from a town and a family that were very public-spirited. I learned that spirit from my parents particularly." [12]
On Inheritance: "It seems to me that the least deserving recipients of wealth are inheritors." [1]
On Hiring: He looked for three qualities in the young analysts he seeded: honesty, intelligence, and competitiveness. [13]
Be a Lifelong Learner. Even at age 87, Robertson was described as having an infectious energy and an enthusiasm for learning that was reserved for a 20-year-old. [14]
Admit What You Don't Know. When he didn't know something, he would openly say so and ask for the answer, demonstrating intellectual humility. [14]
"Accounting was the course that helped me more than anything." [10] A nod to the foundational importance of understanding the language of business.
"There are not a whole lot of people equipped to pull the trigger." [3] Acknowledging that the psychological fortitude to act on analysis is a rare and valuable trait.
Value of Mentors: Mark Yusko, one of his mentees, emphasized the immense value gained from even a small amount of time with a great mentor like Robertson and advised young people to not be afraid to ask for guidance. [7]
"Management is like sailing. When the weather is nice, there is nothing more fun." [5] A picturesque analogy for the joys of leading a successful enterprise in favorable conditions.
On his own fallibility: "I feel very much like a batter who hasn't had a hit at the last 15 to 20 times at bat… You worry about a slump even if you have confidence in yourself." [5] This reveals his humility and the psychological pressures even the most successful investors face.

Learn more:

Lessons from Julian Robertson

On Investment Philosophy and Strategy

On Markets and Opportunities

On People, Mentorship, and Life

Written by Antoine Buteau

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