Secrets of an Iran Contra Insider
by Al Martin
Order Form Here
or Call toll Free
by Al Martin
Failed Hedge-Fund Manager Julian Robertson Threatens Lawsuit against AlMartinRaw.com
(8-15-05) Julian Robertson is a loser. But he doesn’t lose his own money. He only loses Other People’s Money (OPM).
When Julian Robertson was forced to shut down his Tiger Management Group of 6 hedge funds in 2000, according to the Sunday Times of London (April 2, 2000), he readily admitted, “We are in a market I really don’t understand.”
Robertson’s record of failure is a testament to his ineptitude.
In an interview with Institutional Investor, International Edition (December 2002), he was asked, “So who do you blame for the stock market bubble?”
Robertson answered --“Mr. Greenspan. He and all the other politicians and Fed chiefs. Their objective was, ‘Let’s not let anything bad happen on my watch.’ They were not letting normal business corrections happen, setting us up for a doozy.”
(We are checking our market parlance for the definition of the word ‘doozy.’)
Then when asked, ‘What about the situation today?’ Robertson answered, “This can’t go on forever. The little guy is doing it, but now he can’t spend anymore. He’s tapped out. So the economy will collapse like a house of cards.’”
“Collapse like a house of cards”? It should be noted that in the interim, the Dow has rallied some 3,000 points while “the little guy,” as he puts it, keeps increasing debt levels and refinancing his house to maintain consumer spending. And, sad but true, once again, Mr. Robertson has missed a dynamic bull market!
When asked if America’s economy is going to be as bad as Japan’s, Robertson answered, “We Americans are set up for a very tough time for a very long period of time… The economy will fail ‘when the little guy can’t make the monthly mortgage payment on his mortgage.’”
Robertson reiterated this belief in his recent interview on CNBC that he was worried about what was going to happen when Americans started losing their homes.
When Robertson was asked, “How do we get out of this mess?” He answered, “I don’t know how to get out of it. It could be a rough 10-year period for us. I see no way of getting out of it.” That interview was conducted in 2002.
For the record, Julian Robertson was the fund manager of Tiger Management Group, which had $23 billion at its peak and $6 billion when it was rolled up. Robertson has admitted that he doesn’t understand the markets and thus missed one of the most dynamic bull periods in the market (1998-2000) and then again missed a second bull market move from 2002-present. Nevertheless he now wishes to form yet another hedge fund. Undoubtedly, he will name it after some other species of cat. But will this new Robertson “cat” fund defang investors’ wallets again?
The Sunday Times article of April 2, 2000 continues: “When Julian Robertson was shutting down all 6 of his Tiger funds after their assets plunged by $16 billion in 18 months… at that time, the Tiger Management Group had $23 billion and had even overtaken George Soros’ Quantum Group, to become the world’s biggest hedge fund operation.”
“Soros avoided the trap that Tiger fell into by reorganizing his funds and ‘investing in technology stocks.’ His funds were up 25% last year, and assets rose 32%, to $12.1 billion,” according to the Sunday Times.
The Times column -- “In recent years he [Robertson] has suffered a stream of high-level defections, partly due to his autocratic management style and notorious temper.”
(This is a 73-year-old man who lives in New Zealand six months out of the year for tax purposes.)
After the collapse of Tiger, the Times claims that Robertson “still has $1.5 billion of personal assets currently invested with Tiger and says he intends to continue managing his portfolio.”
Before the end, Robertson wrote to shareholders: “We are in a market where reason does not prevail.” But my incompetence reigns supreme he should have added.
Continuing with Julian Robertson’s record of failure, the Financial Times of London (November 6, 2004) writes that his investment management record deteriorated “when Russia defaulted on its debts in 1998. By this stage, he was looking in some very strange places for advice.” According to Strachman, author of A Tiger in the Land of Bulls and Bears, “Robertson had looked to guidance from Margaret Thatcher and Bob Dole. Both had asserted a default was impossible.”
(Robertson was obviously naive to think that the Russians wouldn’t default on their debt. Then Robertson’s desperation led him to try to recoup losses by investing in dangerously unstable but extremely high-yielding debt. It was essentially a gamble. And his investors lost)
The New York Times (March 30, 2000) – “In the last couple of years, Mr. Robertson has been on the wrong side of a series of big investment debts. The first was a $600-million loss in the fall of 1998, when Russia defaulted on its debt, followed by a $1-billion loss in the Japanese yen later that year.”
(Will Mr. Robertson EVER stop losing OPM?)
The other interesting point from the New York Times article -- “One thorny issue in the closing of Tiger is related to Mr. Robertson’s incentive fees, which have been kept offshore where they compound tax-free until the funds are repatriated, according to a source… Mr. Robertson might have a $200-million tax liability on those fees.”
(Did Robertson flee to New Zealand as a tax dodge?)
According to Business Week (April 17, 2000) “Robertson didn’t close his funds after months of agonizing because he was upset with irrational markets. He shut the funds because the largest component of his empire, the Curacao-based Jaguar fund, was literally forced out of business by investors who made the very rational decision to get out.’”
This was yet another Robertson “cat” defanged.
According to Tiger, investors requested nearly $1 billion in redemptions for all of Tiger’s 6 funds as of March 31, 2000.
“Another one of Robertson’s entities, called Ocelot, with about $1.1 billion at its inception, was organized in mid-1997, when Robertson was still riding high. It was marketed by the asset management arm of Donaldson, Lufkin, Jenrette, Inc.”
Everyone should understand why inquiries into the SEC. headed by William Donaldson< went unheeded. Why? Because Donaldson had a direct conflict of interest.
Robertson may be a loser, but he’s a sly loser. According to Business Week, “Ocelot had a 5-year lockup, prohibiting investors from withdrawing their holdings anytime before the middle of 2002 at the earliest. The lockup ensured that investors were unable to withdraw their holdings once Robertson’s funds begin to collapse…one Ocelot investor likens this to ‘being chained to the deck of the Titanic.’”
The redemptions from Tiger led to stock sales, according to Business Week, which hurt Robertson’s performance, which then led to further redemptions, a ‘death spiral’ in the words of Mark W. Yusko, Chief Investment Officer of the University of North Carolina, Chapel Hill.
This man who called Robertson’s performance a ‘death spiral’ of the fund is the very same man that Robertson wants to partner with in a formation of a new Tiger Management Fund.
On May 4, 2005, Hedge World USA reported “Mark Yusko plans to launch a series of funds, operating through a joint venture with legendary hedge-fund manager Julian Robertson, called Tiger Select Fund Management.”
Legendary loser hedge-fund manager, they should have said.
According to Business Week: “Some Ocelot investors are upset that Ocelot’s performance was evidently hurt by withdrawals at other Tiger funds. WS Capital and DLJ subsidiary and Ocelot’s general partner, were asked if Robertson had been mingling Ocelot with other funds.”
Regarding the co-mingling charge -- why didn’t the SEC investigate this? Could it be that SEC Chairman Donaldson was concerned about his exposure at DLJ vis-à-vis Robertson’s offerings?
The Business Week article continues: “Threats of losses, forced liquidations, excuses and, above all, staggering losses. They are a sad end to the career of a man who was once the ‘King of the Wall Street Jungle.’”
Now, by threatening legal action against AlMartinRaw.com, once again, Robertson is attempting to use the courts in an effort to silence all those who would tell the truth about him.
“Robertson was remembered less kindly for losing $200 million in 1996 with a bet on U.S. Treasuries that went wrong… Investors withdrew money from his funds he wound down in 2000 when it had fallen to $6 billion. He has been since running his own foundation. His net worth has been estimated at more than $400 million.”
Business Week (April 17, 2000, called the collapse of Robertson’s Tiger fund “the biggest hedge-fund collapse in history.” And it didn’t get a government/ central bank bailout like the geniuses at Long Term Capital either.
How Robertson dealt with it, according to Business Week, was however a “stroke of genius. And the press largely swallowed it whole…He released a 2-page letter to his investors portraying himself as a champion of rock-solid value investing. This sound philosophy was made impossible by ‘an irrational market’ that he likened to a Ponzi scheme destined for collapse.”
Robertson should have known by then the very first rule of investing: Never fight the trend. Instead he calls the entire market a “Ponzi scheme.”
Instead of blaming his own incompetence, his failure to understand that the nature of the markets was changing, Robertson attempts to blame irrational exuberance on changing technology that he admittedly does not understand.
Then any who would dare expose Robertson’s beliefs is threatened with lawsuit.
Robertson again reiterates that this is “a market which I, frankly, do not understand.”
The question remains -- How many billions of investors’ monies must be lost before Julian Robertson is able to regain his understanding of the market?
“Robertson gave his investors a fantasy, not an explanation.” Business Week continues. “His investors have every right to be furious. ‘This guy is paid as a professional to know what’s going on in the market,’ fumes Maurice J. Colson, a Canadian financial executive who had placed money in Robertson’s Jaguar fund.”
According to Business Week, the cause of Tiger’s demise wasn’t the market at all but a flood of redemptions at his offshore Jaguar fund, something never mentioned by Robertson in his letter and media interviews.
Robertson attempted to punish Business Week by suing them for $1 billion dollars.
And what is Robertson’s compensation for losing his investors’ money? “A hefty 20% slice of profits because he is supposed to know how to exploit irrationality. When markets are out of whack,” Business Week continues, “A hedge fund manager is supposed to know how to take advantage of it. “The Robertson who confessed he didn’t understand the markets was a sad shadow of the Robertson of the `80's.”
“Robertson thought the market was wrong and he was right. He ‘fought the tape’ for too long, a classic amateur’s blunder. Then came the coup-de-gras, the Jaguar disaster, which escaped press scrutiny. You didn’t read about the humiliating forced liquidation of Jaguar, which evidently caused the other Tiger funds to fall like nine-pins,” continues Business Week.
Julian Robertson didn’t fail because he was a rational investor in an irrational world. He failed because he didn’t do his job, is the conclusion of Business Week.
Robertson’s lawsuit against Business Week according to Traders magazine (January 1, 2005) claimed that he had stopped meeting with corporate management. “Robertson, also in the 1990's, was suspicious of the technology craze, was losing assets by the late 1990's. He was a disconnect. Robertson became a Cassandra of the giddy, late-1990's, telling investors that “the current technology, Internet and telecom craze, fueled by performance desires of investors, money managers, even financial buyers, is unwittingly creating a Ponzi pyramid destined for collapse.”
“Destined for collapse.” Robertson’s prediction of a market collapse is on the record.
Even now Robertson is trying to deny, through his attorney, that he is even bearish.
Then there was Robertson’s attack on the Thai baht, which also ended in failure.
Asia magazine wrote, “Hedge-fund operators such as George Soros and Julian Robertson intensify their attack on the baht. One way that speculators bet against the currency was by entering into contracts with dealers who would give dollars in return for an agreement to repay a specific amount of bahts some time in the future. If the baht rose in value, the settler of the contract made money… because he could repay the contract with cheaper bots. This action turned out to be a fatal misstep that placed in the hands of speculators the perfect weapon with which to attack the currency.” “Julian Robertson’s Tiger funds, which attacked the baht with a war chest of $3 billion, lost $3.4 billion in October this year (1997), lost $3.4 billion on top of a $2.1-billion loss U.S. in September. The Tiger funds, which are now not roaring as in the past, are now worth $17 billion.”
In other words, Robertson went from $22 billion to $17 billion. What’s odd about it is that Julian Robertson claims to be a value investor. The problem with a value investor is you need to buy stocks cheaply, which he was able to do in the 1980's, due to Bushonomics, with its enormous buildup of debt and its enormous increase in corporate leverage it had fostered, which made stocks relatively cheap.
But what’s odd about it is Robertson, a pro-Bush faction supporter, was, during the fiscally prudent Clinton regime, unable to make money.
This implies that Robertson didn’t believe that a Democratic regime could act with fiscal prudence and produce budgetary surpluses.
Corporate America (the United States Incorporated) was strengthened under the prudent fiscal management of the Clinton regime, which did produce budget surpluses to pay down debt. And corporate balance sheets were also improved during this period of time.
Robertson just didn’t understand that value stocks aren’t necessarily going to rise in a state of improving fiscal health within the government, business or industry. What does rise and get promoted in this environment is technology stocks; because the Clinton regime purposely fostered tax benefits for new research and development. Startup companies and high technology took advantage of it. But Robertson completely missed the Internet craze, which made some billions.
Robertson’s history of failure in the market is also pursued by his history of failure in the legal field.
Another effort to intimidate those who would tell the truth about Robertson’s record as a financial advisor took place when Robertson filed suit against Business Week. According to Folio magazine, (June 1, 1997), “Julian Robertson initiated legal proceedings against McGraw-Hill, Inc. over 1996 profiles that appeared in Business Week, asking for damages totaling $1 billion… Robertson beat New York’s 1-year statute of limitations by registering a ‘summons with notice,’ a formal declaration that a suit will be filed later.”
This is the same tactic Robertson’s attorneys are using against AlMartinRaw.com. It is simply a weapon of intimidation.
“Robertson is requesting $500 million in compensatory damages and $500 million in punitive. A spokesman for Robertson calls the $1-billion amount ‘a nice round number’.” (A nice round fallacious number he should have said. Talk about arrogance)
“The summons claims that the 5800-word cover story, ‘Fall of the Wizard,’ in the April 1, 1996 issue included statements that were ‘false and defamatory’… Sandra Barron, executive director of Libel Defense Resource Center in New York City, said, ‘The Robertson claim is just that, a claim. It’s attention-getting, and there’s nothing new about it.’”
“Robert O’Neill, who is a director of Thomas Jefferson Center for Protection of Free Expression, a law professor at University of Virginia, says, ‘Robertson would probably be deemed a public figure in an actual trial, meaning he’d have to prove that Business Week acted with actual malice in printing their profile.”
The result of which is that the lawsuit was settled 2 years later without any of the defendants paying a dime.
More recently, Julian Robertson has moved to New Zealand and is meddling in Kiwi politics. The New Zealand press is calling Robertson “The Billionaire Bagman,” due to allegation that he is making large donations to the National Party, the American equivalent of the Republican Party.
Robertson is portrayed as “a sugar daddy who owns luxury golf courses at Kauri Cliffs and Cape Kidnappers.”
The name “Cape Kidnappers” is quite apropos. Robertson may be financing his personal projects by kidnapping his investors’ money.
The New Zealand Herald, (July 27, 2005) mentions Robertson as “the American businessman known as ‘never-been-wrong Robertson.’” who began his love affair with New Zealand many decades ago, and now owns prestigious properties, such as Kauri Cliffs Golf Course.”
They should have called the article “Never-Been-Right Robertson.”
“Robertson’s Republican credentials have bought Prime Minister Helen Clark cover with some Beltway players who still nurture grievances over the Labor government’s legislation, which effectively bans visits by U.S. nuclear warships.”
According to Scoop, Independent News of New Zealand (July 22. 2005), Robertson has supported the National Party and Don Brash who has publicly called for Republican-like policies in New Zealand such as “abolishing the minimum wage, supporting President Bush’s decision to go to war in Iraq, and having the unemployed queue outside the post office”
Brash also wants to allow American nuclear-powered warships to invade New Zealand waters at will.
And this is the story that connects the dots about this befuddled old fool, Julian Robertson, who, by his own admission, does not understand modern technology.
Now Julian Robertson can learn the power of the Internet and the Power of Truth, the Al Martin Raw.com tagline.
All of those who are interested in seeing the truth about Robertson be told are free to email, reprint or republish this article, which is copyright-free.
Furthermore AlmartinRaw.com is considering contacting the multitudes of aggrieved investors who lost money because of Robertson’s incompetence to discuss the possibility of a class action lawsuit based on losses suffered by Tiger Fund investors. The lawsuit would question Robertson’s competence as a funds manager since, by his own admission, he says he “doesn’t understand the markets.”
From a $23-billion hedge fund to $6 billion -- where did the money go?
By comparison, AlmartinRaw.com invites readers to look at the record of our sister website InsiderIntelligence.com, in which our $25,000 model trade portfolio is now worth $150,000 after 47 weeks.
And what will become of Julian Robertson?
Will Robertson’s next hedge fund be called “The Polecat Fund” because it’s such a “stinker”? Or will it be called the “Alley Cat Fund” because his investors end up in the alley next to the dumpster?
From Tiger to Jaguar to Alley Cat. The funny thing about it is that Robertson’s cats keep getting smaller and smaller as his investors’ losses mount. It’s almost like a subconscious admission of his losing streak.
In the end, Julian Robertson will be hoisted by his own petard and his own fiduciary irresponsibility.
Remember, according to the Sunday Times of London (April 2, 2000), when Julian Robertson was forced to shut down his Tiger Management Group, he admitted, “We are in a market I really don’t understand.”
From a $23-billion hedge fund to $6 billion -- where did the money go?
* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.
After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.
His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin Raw.com, which also publishes a bimonthly newsletter called "Whistleblower Gazette."
Al Martin's new website "Insider Intelligence" (http://www.insiderintelligence.com) will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.
©2000 - 2005 Al Martin Raw All Rights Reserved