Julian Robertson’s background

Julian Robertson worked as a stockbroker during his early career. Then when he was in his 40s, he started a hedge fund. Tiger Management. They did very well for about 10 years, then they took too much risk, lost a lot of money and their investors pulled out.

However, Julian Robertson was a supremely good manager/leader/teacher and (like Richard Rainwater) spawned some of the best investors for the next 20+ years. Some of these people went on to create their own funds, known as “Tiger Cubs”, which are still active and successful.

Julian Robertson’s strategies for value investing

Julian Robertson (and many of his analysts at Tiger) were extremely good at fundamental analysis. They were particularly good at analyzing the balance sheets of large financial companies, like banks.

Some guidelines from Julian Robertson:

• Don’t try to time the market, use some kind of hedge instead.
• Look for new markets where there is less competition from other investors.
• Buy good companies in an industry you believe in, and short the bad ones. Julian Robertson bought Wal-Mart, and shorted its weaker competitors (in regions where Wal-Mart had stores that were dominating its more expensive competitors).
• Don’t focus on macroeconomic analysis, put all your analytical efforts into fundamental analysis.
• Try to find many good ideas, instead of one great one.
• Don’t overcomplicate your investments, look for 2-3 large factors that make it a no-brainer.
• Buy companies that have, or will soon have, a monopoly in their industry. Julian Robertson bought, among others, the diamond company De Beers, and Wal-Mart.
• Buy small, fast-growing companies that are not monitored by analysts.
• Do an industry analysis and then look for a clear reason why one of these companies has a strong competitive advantage over the others. Here’s a good example: Julian Robertson & Tiger bought Tesco, because they had their own brands (like ICA Basic and Garant today, in Sweden). This meant that they could have a higher profit per shelf-space, and they also had control over the brand. The other big stores didn’t have that at the time.

Julian Robertson’s biggest mistake:

His biggest mistake was to drop his growth stocks and buy cheap value stocks in 1998-1999, during the peak of the IT boom! It would have worked – and probably been very profitable – for a private investor, but it did not work for him as the manager of a hedge fund.

He also used too much leverage when doing this and was thus punished extra hard by being slightly off with his timing.

Read more: About 20 other renowned value investors and their strategies