Legendary stock picker Julian Robertson is ready to throw in the towel on stocks, because Wall Street “is irrational and gone mad” over Internet high-flyers.
The 67-year-old billionaire has reigned as Wall Street’s most successful stock picker for two decades by adhering to his strict principles of buying only companies with earnings, seasoned management and ample cash flows.
But rumors swept trading houses yesterday that he’ll shutter his Tiger Management hedge funds as early as tomorrow over an avalanche of losses that have hit traditional blue chips in a tug-o’-war with high-tech stocks.
A Tiger spokesman said the company “doesn’t comment on rumors, particularly those from traders.”
The six funds under Tiger’s control were devastated in the last 18 months — dropping to just $6 billion from $21 billion. Jaguar was the largest with about half the assets.
The group has unloaded many big chunks of its holdings in recent weeks, including its 12 percent stake in Federal-Mogul Corp. and stakes in Intel Corp. and Sealed Air Corp.
Robertson earned a nickname as the “Wizard of Wall Street” for stellar returns — about 25 percent a year over the past 20 years. But it began to crumble when the New Economy roared in two years ago and rewrote the rules of stock picking.
The last two years, Tiger was down more than 20 percent.
“Everyone invests now where there are no profits and no fundamentals,” one of his colleagues said of the Internet craze.
“But he won’t play the Internet game because he doesn’t believe in it — and he’s lost out.”
Another friend added: “I think he’s simply saying — ‘I can’t operate in this irrational environment … Wall Street’s gone mad with the Internet.’ Personally, I think it’s healthy to stand up against all the irrationality going on. It’s also better than losing all the money.”
As of last night, Tiger’s clients had not been contacted about any changes, insiders said.
The insiders said that if Robertson shuts down his funds to give back money to investors, it would be an orderly process that wouldn’t cause any tax upheavals. Money could be rolled over into other funds.
Of the $6 billion left, about $1.5 billion is Robertson’s own assets. Another $500 million belongs to his 20 partners.
Robertson, a North Carolinian who first became a broker in Wall Street’s “go-go” years of the 1960s, launched Tiger in 1980 with $8 million.
Robertson has ferociously guarded his reputation and three years ago sued Business Week for $1 billion for reporting he had “lost his touch and suffered from an uncontrollable temper.” BW retracted its story.
Robertson, who dropped out of Wall Street for one year in 1972 to write a novel in New Zealand, which remains unfinished, has three sons with his wife, Josie. Two years ago, he gave $25 million to Lincoln Center to have the cultural center’s plaza named after his wife, making the announcement on the same day that his fund announced an August 1998 loss of $600 million.