Patrick McCormack‘s Tiger Consumer Management will soon be closing its doors. It was announced in an investor letter on Wednesday that McCormack, a “Tiger Cub” protégé of Julian Robertson’s (pictured) will liquidate his equities and close the fund down by the end of the month. The fund closes on a high note, up 3.9% in 2015 through February after a strong 4.6% gain during that month. McCormack cited the desire to spend more time with his family as a driving factor in his decision.
“Managing a fundamentally driven, long/short equity hedge fund is rewarding but demanding work. I have decided after nearly 15 years of doing so, at this stage of my life, I would like to spend more time with my family,” McCormack said in the investor letter.
McCormack started the hedge fund in 2000 with “Tiger Seed” money from Robertson, who also helped fund the launch of several other Tiger Cubs who worked under him over the years after closing his own fund to outside investors in March 2000. McCormack employed a traditional long/short equity hedge fund.
“We do not engage in market timing and therefore do not change our net exposure based on a market or economic view. The two governing factors to our growth are liquidity and research capacity,” McCormack stated in a 2010 letter to investors.
McCormack used that research capacity to expertly time moves into certain stocks over the years, including making a bigger move into Facebook Inc (NASDAQ:FB) heading into the summer of 2013, just before shares of the social media giant were on the verge of nearly tripling over the next nine months. Facebook remained one of his top holdings right until the end of 2014, along with Liberty Global plc (NASDAQ:LBTYK) and CarMax Inc (NYSE:KMX), as we reported in February.
It’s possible that McCormack may have been planning the close for several months dating back to the fourth quarter of 2014, as his fund slashed its equity holdings by about 31% during the quarter, down to $1.39 billion from $2.01 billion at the end of the third quarter. McCormack reduced positions or sold out of 27 stocks, while only opening seven new positions and increasing his stake in one.
Let’s take a look now at the top three of those new positions McCormack opened last quarter, the final such moves that will be reported by the fund. The top new position, and fourth largest overall was in video streaming service Netflix, Inc. (NASDAQ:NFLX) though it wasn’t the first time McCormack had invested in the company. He initiated a position in the third quarter of 2011, consisting of 386,400 shares at the time, but had sold out of it by the end of the first quarter of 2012, after Netflix, Inc. (NASDAQ:NFLX) had rebounded slightly from its catastrophic fall in the second half of 2011.
The most recent new position in Netflix, Inc. (NASDAQ:NFLX) consisted of 182,100 shares, which were now more valuable than his much larger holding of shares in 2011, at $62.21 million. So long as the investment occurred after October 15, it will have proven to be a very wise one for McCormack. Shares are up 35% year-to-date, on impressive subscriber growth figures recently reported.
The second largest new position was in Tripadvisor Inc (NASDAQ:TRIP), with 808,800 shares worth $60.39 million. It’s also not the first time McCormack invested in Tripadvisor Inc (NASDAQ:TRIP), as he had previously opened a position on the online travel agency in the third quarter of 2012. He sold off the position over the next two quarters.
While he collected a small profit on that deal, in hindsight he sold out too early, as Tripadvisor Inc (NASDAQ:TRIP) continued to rise throughout 2013 and into early 2014, more than doubling from the beginning of 2013. McCormack again caught an old favorite on a swoon, as Tripadvisor struggled throughout the second half of 2014, shedding over 30% of its value, before rebounding early in 2015, up 15.2% for the year.
GrubHub Inc (NYSE:GRUB) was McCormack’s third choice out of new positions last quarter, as he initiated a position of 1.50 million shares worth $54.62 million, vaulting him to the top of the shareholder list among funds we track. The online and mobile platform for restaurant and delivery orders was a popular pick among tracked funds last quarter, with 32 funds having $375.17 million invested in GrubHub Inc (NYSE:GRUB), a large increase from the 16 funds which had $116.97 million invested at the end of the third quarter.
All of McCormack’s top new positions appear to have paid dividends (not literal dividends, but figurative ones), as all had strong returns thus far in 2015, contributing to the fund’s good performance. GrubHub Inc (NYSE:GRUB) is up 17.29% year-to-date.
The Insider Monkey team wishes Patrick McCormack and the entire Tiger Consumer Management team all the best in the next phase of their lives.
Disclosure: None
