The Big Lesson From the 'Tiger Family'

In yesterday's Empire Financial Daily essay, I wrote about the legacy of legendary hedge fund manager Julian Robertson in the wake his passing at the age of 90... In particular, I spoke about the extremely rigorous research process that his funds engaged in – referred to as value-added research ("VAR"). I've had the distinct privilege […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Big Lesson From the 'Tiger Family' By Enrique Abeyta --------------------------------------------------------------- [Until MIDNIGHT TONIGHT, claim a charter membership to the Empire Financial Junior Partnership]( It's a pivot away from individual subscriptions... expensive renewal fees... and endless sales pitches... and into the perfect experience for readers who are serious about learning how to make money in the markets. In other words, it might be the best deal in the entire newsletter industry. [Click here by midnight tonight to learn more](. --------------------------------------------------------------- In yesterday's Empire Financial Daily essay, I wrote about the legacy of legendary hedge fund manager Julian Robertson in the wake his passing at the age of 90... In particular, I spoke about the extremely rigorous research process that his funds engaged in – referred to as value-added research ("VAR"). I've had the distinct privilege of working at a Tiger grand cub fund and seeing this process firsthand. It was impressive. In my interactions with various branches of the 'Tiger family' over the years, there have been other big takeaways as well... One of those – and something regular readers of my publications will be familiar with – is the importance of selectivity and looking for big returns. This was hammered home for me several decades ago when I sat down to lunch with my old friend Charlie Anderson. Charlie had joined Tiger right before it shut down and had been one of the first Tiger cubs to be seeded by Julian. Since there were less people vying for Julian's time after the fund had been shut down, this timing meant Charlie got a ton of one-on-one time with him. We sat down to lunch, and I remember being excited about a particular idea in the utility space. I loved the risk/reward of the idea. I had an opportunity where I thought I could see 30% to 60% upside, but – since it was a utility with a high dividend yield – I only saw a low downside of about 10%. That kind of risk/reward of 3 times to 6 times is attractive, especially when it's not particularly correlated to the economy or stock market. As I was explaining my thesis, I noticed that Charlie was focused on his salad and not paying attention. About halfway through, I stopped and very politely said, "Hey Charlie, is there something wrong with this idea? You don't seem very interested." Charlie was and is one of the most polite Southern gentlemen you will ever meet, which is why I had to ask! He looked up at me and said, "Look, you have to understand that if I walk into Julian's office with an idea with only 50% upside, he will literally throw me out! Don't think he is interested in anything less than a multibagger [several 100%]." --------------------------------------------------------------- Recommended Link: [It's all up from here for this inflation stock]( Right now, one inflation stock is catching the attention of the world's largest money manager. Get in now before it takes off. [Get full details here](. --------------------------------------------------------------- This is a simple concept, but I hadn't fully grasped it in my investing philosophy at the time... If you aim for a bunch of 50% returns, then with the inevitable "failure rate" you are likely to see a low double-digit return. If you aim for 300% returns, then – even with a much higher failure rate – you'll see a lot higher aggregate returns. This doesn't mean there isn't risk involved, but in order to get big returns, you need to aim for big returns. This was also demonstrated to me in conversations with another Tiger cub – my friend David Craver of Steve Mandel's Lone Pine Capital. I remember sitting down with him in the late 1990s and he expressed a similar opinion... If you are going to look for stocks to invest in, you should be looking for big returns. Craver, in particular, emphasized the value of the underlying opportunity for the company. Investors and analysts often speak about a concept called the total addressable market ('TAM')... This is how big the market is that a company is addressing. Consider dating service company Match Group (MTCH). It owns online dating services like Tinder, Match, and Hinge and has more than 16 million paid subscribers. There are 4.7 billion Internet users on earth, and we bet that there are more than 1 billion of them looking for a relationship of one type or another. Now we aren't saying that Match will end up with 1 billion paid subscribers... But we are pointing out that there is a lot of head room between 16 million and 1 billion! This is the exact concept of a large TAM. In my meetings with Craver, he would always start with this question – how big is the TAM? How big is the market opportunity? Remember that the path of stock prices often follows the path of earnings. If Match goes from 16 million paid subscribers to 25 million, 50 million, or 100 million – then the stock is going to go a lot higher! One important note with these ideas from Tiger – this is for investing. Trading portfolios should have a very different perspective... But the biggest takeaway I ever got from my involvement with the Tiger family was this focus on big returns. I hope you can use it to your advantage also! Regards, Enrique Abeyta September 8, 2022 Editor's note: Enrique has one simple yet powerful trading strategy he honed while working on Wall Street for 25 years... And in his Empire Elite Trader service, he has used it over the past three years to find new payout opportunities for his readers every month, giving folks the chance to score a steady stream of wins. Learn more about Empire Elite Trader – including how to gain access to his latest trade recommendation, published yesterday – [right here](. --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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