Ryan Remiorz/Associated Press
Nov. 8, 2015 7:10 p.m. ET
She earned an M.B.A. from Wharton at age 21, won backing from hedge-fund industry heavyweight Julian Robertson before she turned 30 and earlier this year became one of the few women to manage more than $1 billion in an industry long dominated by men.
Now Nehal Chopra has reached a less glorious milestone: more than $300 million in paper losses over the past three months, one of the swiftest and most severe money-losing streaks in a bruising year for hedge funds.
Ms. Chopra’s Tiger Ratan Capital Fund LP fell about 33% over the past three months, wiping out her gains for 2015 and eating into more than half of last year’s profits, according to investor documents and people familiar with the matter.
Ms. Chopra, without warning, recently stopped updating prospective investors on the firm’s performance.
Tiger Ratan, said people familiar with it, has been hurt by the same stock battering many on Wall Street: Valeant Pharmaceuticals International Inc.
The once-highflying drug maker has faced questions about its pricing strategies, accounting and business practices. Shares of Valeant have tumbled 43% this year, causing steep trading losses for a number of hedge-fund managers including Lone Pine Capital LLC and William Ackman’s Pershing Square Capital Management LP.
Valeant has said it has found no evidence of illegality and established a board committee to look at its relationship with a specialty pharmacy that distributed its drugs.
Tiger Ratan has been a Valeant holder through most of its six-year history, and Mr. Robertson lauded Ms. Chopra for bringing the investment idea to dozens of other managers in the stable of funds he backs. The Valeant position accounted for more than one-fifth of Tiger Ratan’s U.S. stock portfolio in its most recent public filings.
Tiger Ratan is also suffering losses from a bet on European cable conglomerate Altice
NV, which as recently as last month was the largest holding in the firm’s portfolio, a person familiar with the matter said. Altice has been under fire as investors question its ability to acquire Cablevision Systems Corp.
in a heavily leveraged deal and its stock has dropped 44.2% over the past three months.
Betting on mergers and acquisitions has been one of the most consistently lucrative hedge-fund strategies in recent years.
“The lesson this year has become: What worked before will now kill you,” said Andrew Beer, chief executive of hedge-fund investor Beachhead Capital Management LLC.
Tiger Ratan’s latest losses are a dark turn for what had been one of the hedge-fund world’s most talked-about success stories.
Ms. Chopra, 35 years old, was a highly ranked tennis player as a teenager in her native India before she moved to the U.S. at age 18 to attend the University of Pennsylvania. Shortly after graduating from Wharton early, she went to work for Lehman Brothers Holdings Inc. and later hedge-fund firm Balyasny Asset Management LP.
In 2009 she founded Tiger Ratan, named after the Hindi word for “jewel.” She struck a deal for $25 million from the octogenarian Mr. Robertson’s Tiger Management in exchange for splitting some of her future fees. Tiger Management later added even more money and she ran the fund from Tiger’s New York offices until last year, people familiar with the matter said.
By this summer, Ratan had more than $1 billion under management and Ms. Chopra was lauded as a rare successful female trader in an industry that has struggled to attract and retain high-level employees with different backgrounds.
Investors include New York state’s retirement system, which put in money specifically earmarked for women and minority-run investment firms. A spokesman for the retirement system declined to comment.
From its inception to this July, Ratan posted an average annualized return of around 24%, after fees.
People who have met with Ms. Chopra say she showed a strong command of the portfolio and was quick with answers to their questions. However, several said they passed on investing because of concerns about relatively high staff turnover and a dearth of conflicting perspectives. Ms. Chopra is one of just three investment employees at present.
Some investors also said they were concerned about Ms. Chopra’s tendency to maintain outsize positions without commensurate offsetting bets to protect against declines. That imbalance has bitten the firm lately. Tiger Ratan as of last month held a huge portion of its fund in the telecommunications giant Altice, a person familiar with the matter said.
Under fire, Ms. Chopra is hunkering down, according to people familiar with the matter. She stopped sending monthly performance updates to many prospective investors, raising alarms for some of them, though representatives of the firm have continued updating existing investors on its losses.
Tiger Ratan’s Valeant position, once the firm’s biggest, has been pared down to less than 10% of the portfolio, a person familiar with the matter said. Another person said Valeant has still made money for the firm overall, even including losses this fall.
Tiger Ratan’s main fund is now down about 12% through the end of October, the people said, compared with a 1% loss for the average stock-picking hedge fund tracked by HFR Inc. The S&P 500 is up 2% this year, including dividends. Tiger Ratan has given back more than half of last year’s 22.6% gain.
Write to Rob Copeland at [email protected]
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