The murmurs have been building for months now. Three years after the spectacular Archegos implosion sent shockwaves through prime brokers and cost them roughly $10 billion, nervous eyes are scanning the financial landscape for the next potential disaster. And increasingly, those glances are landing on Tiger Global Management.
Chase Coleman's hedge fund—once the darling of the tech investment world—has suffered a brutal reversal of fortune since its pandemic glory days. After hemorrhaging 56% in 2022 (ouch) and limping along since, industry insiders have begun whispering about whether Tiger might become "the next TRuth"—a not-so-subtle reference to Bill Hwang's Tiger Asia, which later morphed into the ill-fated Archegos.
Look, I'm not suggesting Tiger Global is teetering on the brink. Coleman's operation is fundamentally different from Hwang's leveraged-to-the-hilt family office. But when you start noticing parallels, you can't help raising an eyebrow.
Both firms emerged from Julian Robertson's legendary Tiger Management ecosystem. Both built concentrated bets on high-flying tech stocks. Both rode the easy-money wave to dizzying heights... before the Fed's tightening cycle changed everything.
I've covered fund implosions since the 2008 crisis, and there's something I call the "Hotel California dilemma" that applies perfectly here—massive funds can check into positions anytime they like, but they can never leave. At least not all at once without tanking their own holdings.
Tiger's recent 13F filings show chunky positions in volatile names like JD.com and Sea Limited—many now trading at fractions of their former glory. They've been methodically reducing exposure (smart move), but here's where things get dicey: during their growth phase, Tiger reportedly employed substantial leverage. Even if they've dialed it back (and they almost certainly have), modest leverage on a shrinking asset base creates potential wobbles.
Remember Archegos? They operated through total return swaps that provided synthetic exposure without direct ownership, juicing returns while skirting disclosure requirements. No evidence suggests Tiger employs similar structures extensively, but you better believe prime brokers are watching concentration risk like hawks after getting burned so badly.
The redemption factor presents another parallel worth considering. Unlike Archegos (a family office immune to outside investors fleeing), Tiger manages other people's money—lots of it. After disappointing returns, redemption requests have reportedly been substantial. This creates that nasty feedback loop we've seen before: selling to meet redemptions drives down prices, which triggers more redemptions, which necessitates more selling...
Now, credit where it's due. Tiger has been making rational moves to stabilize the ship. They've slashed their public equity portfolio, pivoted toward private investments (where those pesky daily mark-to-markets don't exist), cut staff, and reduced leverage. All the right moves for a shop that understands its precarious position.
But markets have a sadistic streak. One brutal day can unravel even the most carefully orchestrated deleveraging plans when positions are massive and liquidity evaporates.
The prime brokers, still nursing their Archegos wounds, have presumably tightened risk controls. Whether that's enough—or whether concentrations exist in their blind spots—remains the multi-billion-dollar question.
Is another TRuth imminent? Probably not in Archegos' exact mold. Financial disasters tend to rhyme rather than repeat verbatim. But somewhere in some dark corner of the market, excessive leverage is building in ways that will only become blindingly obvious in retrospect.
That's the frustrating paradox of finance—periods of calm breed the very excesses that trigger the next crisis. Tiger might not be the epicenter of whatever comes next (and I genuinely hope they navigate through their challenges), but someone somewhere is taking risks their models deem reasonable that reality will eventually judge otherwise.
It's practically the only financial TRuth you can bank on.
