Tiger Pacific Capital was founded in 2012 on the ashes of Tiger Asia Management, which closed the same year on allegations of insider trading. In 2001, Julian Robertson, an investor well known not just for his successful tenure as the manager of Tiger Management, but also for seeding many other hedge funds, helped Bill Hwang found Tiger Asia Management. However, in 2012 the $1.6 billion fund was closed and Bill Hwang pleaded guilty to using illegal information to invest in Chinese bank stocks; he agreed to pay settlements worth over $60 million in total.
Same year, Robertson also seeded Tiger Pacific Capital, which was founded by Tiger Asia’s partners Run Ye, Junji Takegami and Hoyon Hwang. If Tiger Asia was a “Tiger Cub”, Tiger Pacific Capital is a “Tiger Grand Cub”, a name used to describe funds that were launched by alumni of a “Tiger Cub” fund. Similar to Tiger Asia, Tiger Pacific focused on Asian stocks, primarily from China. In a statement regarding his investment in Tiger Pacific cited by Reuters, Robertson said: “Asia is the best area in the world to practice the hedge fund business.”
Tiger Pacific Capital was launched in November 2012 and is owned equally by Run Ye, Junji Takegami, and Hoyon Hwang, who are the fund’s managing partners and Run Ye is also Tiger Pacific’s Chief Investment Officer. Tiger Pacific has regulatory assets under management of around $633 million and operates three funds: Tiger Pacific Domestic Fund, Tiger Pacific Offshore Fund and Tiger Pacific Master Fund. Tiger Pacific uses long and short positions and invests in Asia-related equities, the majority of which are represented by companies from China, Japan, and South Korea.
Betting on Asian stocks is paying off handsomely for Tiger Pacific. At Insider Monkey, we estimate a fund’s performance by calculating the weighted average returns of its long positions in companies worth over $1.0 billion. Based on our calculations, Tiger Pacific Capital’s holdings gained 16.90% during the second quarter of 2017 and were 40.70% in the green in the first six months of the year. The performance of Tiger Pacific’s investment seems consistent as they were up by nearly 76% in the 12-month period ended June 30.
In its latest 13F filing, Tiger Pacific Capital reported an equity portfolio worth $140.75 million, which is fairly concentrated as it contains just 13 positions and the top five holdings amass over 70% of the value. As stated earlier, Tiger Pacific is focused on investing in Asian stocks, so it’s not surprising that all of its positions are in US-listed companies based in China or Hong Kong.
Moreover, during the third quarter, Tiger Pacific made some substantial changes in its portfolio as it sold its entire holdings in four companies and added five new holdings. In other stakes it made substantial changes and left unchanged just four positions, including the largest one, in Noah Holdings Limited (ADR) (NYSE:NOAH), a Shanghai-based wealth management service. At the end of September, Tiger Pacific held 1.44 million shares of Noah Holdings Limited (ADR) (NYSE:NOAH) worth $46.10 million.
On the next page, we are going to take a closer look at SINA Corp (NASDAQ:SINA), which represents Tiger Pacific’s largest new position, and four companies in which the fund sold its entire holdings: Tarena International Inc (ADR) (NASDAQ:TEDU), 58.com Inc (ADR) (NYSE:WUBA), Autohome Inc (ADR) (NYSE:ATHM), and Vipshop Holdings Ltd – ADR (NYSE:VIPS).