Best Quote:“Management must be wedded to the bottom line as against building sales. It must have both a long term plan and the means to implement it.”
What would have Robertson bought in India? Low cost private label Retailers like Trent, Monopolistic enterprises like Concor and a few cheap Banks.
Julian Robertson the fund manager at the Tiger Fund was introduced to stocks when he was just six years old. He had been particularly attracted to businesses that were monopolistic and oligopolistic. His best stock picks were De –Beers purchased at a PE multiple of three and a half. The South African Diamond major controlled more then 80% of the world's diamond market. While he was long on Wal – Mart he was short the other high cost retailers on the premise that Wal-Mart's low cost strategy would finally push its competitors out of business. Robertson was amongst the very few Investing legends that bought Wal-Mart in the initial stages of its growth. The ones who missed it were Warren Buffet, Peter Lynch, Marc Faber to name a few.
In 1989 post the fall of the Berlin Wall Robertson took huge positions on the German bourses. He was particularly long on the banks and Industrials. Neglected markets always sold cheap and Germany was no exception. The fall of the Berlin wall was the classic catalyst needed to draw attention. Amongst his other country specific bets was Japan , a market he started buying in 1970. He insured his positions in 1990 by buying puts on the Nikkei and shorting Japanese Banks. At one point of time he had more then 10% of his portfolio on Nikkei puts. Subsequently when the Nikkei fell the short positions and puts brought in millions for him.
Robertson used to bet big on leveraged positions . Normally he would have leveraged his portfolio to two to two and a half times its assets and would have also balanced his portfolio between US and non – US Stocks. Most of his gains were made in bottom up stock picking. He wasn't great at gambling on macro variables like currency and bonds etc.
Robertson had a knack of identifying retailing stocks. In the U.K he bought Sainsbury and Tesco, the grocery retailers. These companies owed and sold a large number of their own brands. Back home in the US he made a killing in Time Warner, Comcast and TCI. As with Peter Lynch “Buy what you see” worked perfectly with him.
Robertson is impressed by India 's internal dynamics. The huge pool of doctors, engineers and accountants is perceived to be a solid advantage. The business environment, legal structure and strong stock market trading and risk control measures also attract him.
During the technology bubble Robertson could not develop conviction on any of the tech stocks. His value picks on a couple of airline and banking stocks also went wrong. His investors panicked and withdrew. His bets on the Japanese currency and emerging markets also backfired and Robertson had to close down his fund in 2000 – but as they say this is the nature of the beast.
