Chase Coleman Trading Strategy & Philosophy
Julian Robertson’s influence on Chase Coleman laid the groundwork for Tiger Global’s distinctive hybrid financial strategies.
Fusing traditional hedge fund techniques with venture capital agility, Coleman positioned Tiger Global to excel in identifying transformative companies.
We look at Coleman’s early years, market philosophy, and the impact of Tiger Global’s approach on the industry.
What can you apply and adapt to your own strategies?
Key Takeaways – Chase Coleman Trading Strategy & Philosophy
- Hybrid Public-Private Approach
- Coleman blends hedge fund rigor with venture capital speed.
- Enables positions across both public and private markets rather than limiting to one or the other.
- Technology Focus
- He prioritizes transformative trends, such as AI and automation in markets, recognizing their long-term potential for disruption and growth.
- Data-Driven Decisions and Return on Time
- Tiger Global uses data analytics and streamlined due diligence to identify sustainable opportunities, do more potential deals, and gain an informational edge.
- Tech is often narrative-driven, but for professional traders/investors, going off that can be dangerous without data and facts that correlate with subsequent outcomes.
- Return on time = It’s important to do things well, but there also needs to be a certain level of speed and volume as well.
The “Tiger Cub” Pedigree: Julian Robertson’s Influence
From Mentorship to Independence
Chase Coleman’s career started under the tutelage of Julian Robertson, the founder of Tiger Management.
After graduating from Williams College with an economics degree in 1997, Coleman joined Tiger Management, securing an analyst position in part due to his childhood friendship with Robertson’s son.
This provided him direct access to one of the most successful hedge fund managers in history.
Tiger Management, as we covered here, was known for its deep research, using a long/short equity strategy focused on identifying undervalued and overvalued companies – a foundation that his “Tiger Cub” proteges also applied and adapted.
Coleman’s early career under Robertson focused on technology investing and spotting market inefficiencies.
The Launch of Tiger Global
In 2000, as Robertson closed Tiger Management amid markets that didn’t make sense to him (tech bubble), he recognized Coleman’s potential.
Robertson provided Coleman with seed capital of $25 million, operational infrastructure, and access to his influential network to establish Tiger Technology, later rebranded as Tiger Global Management.
This backing from a legendary investor was a important endorsement of Coleman’s abilities and provided a key launchpad.
Tiger Global’s Investment Strategy: A Hybrid Approach
Blending Hedge Fund and Venture Capital Strategies
Tiger Global’s approach is a unique mix of traditional hedge fund strategies and venture capital principles.
This hybrid model enables the firm to go across both public and private markets, taking opportunities independent of whether they’re public or private.
The firm’s structure enables it to engage in long/short equity investing while also pursuing high-growth or favorable private investments.
Likewise, for individuals, this approach shows the importance of being open to opportunities whatever their form.
Public markets are highly competitive and tend to be pretty well combed over. This can make a tactical, value-based approach challenging.
Private markets can offer opportunities to those with the knowledge, network, and expertise to navigate them.
Investing in private markets can be compelling. But it can also be very risky without proper due diligence.
Issues such as overestimating valuations, ignoring liquidity risks, falling for scams, or underestimating operational and legal complexities can lead to losses, especially if diversification is lacking, market timing is poor, networks are unreliable, or long-term commitments are underestimated.
Overall, more room for good, but also more room for bad if individuals lack the proper understanding or preparation.
For example, running a YouTube channel can be a profitable opportunity, but if you lack a clear niche, consistent content strategy, or it doesn’t engage an audience, it may fail to generate meaningful returns despite significant time and effort.
But individuals can emulate aspects of Tiger Global’s strategy to seek out high-potential investments that align with their goals.
Related: Income Trading Strategies
Long/Short Equity: Profiting from Market Inefficiencies
Drawing on his training at Tiger Management, Coleman formed his strategy around identifying and investing in undervalued companies while simultaneously shorting overvalued companies.
The fund’s ability to generate profits independent of broader market movements contributed to its impressive 21% compounded annual return over two decades (net).
If you invested $1 million with the fund at the beginning, it’d be worth $43 million today vs. $5 million if you’d invested in the S&P 500 instead.
Venture Capital: Speed, Scale, and a Hands-Off Philosophy
Tiger Global’s private equity arm mirrors the approach of Silicon Valley venture capital firms.
The firm is known for rapid decision-making (what some refer to as “speed of capital”), investing capital with fewer due diligence requirements than traditional private equity.
They eschew board seats and operational control, preferring to trust the existing management teams of their portfolio companies.
Technology as a Core Theme: Identifying Transformative Trends
A central tenet of Tiger Global’s strategy is a focus on the technology sector.
Coleman recognized early on the internet’s potential to disrupt industries and create substantial value.
This conviction led to early investments in companies like Facebook, LinkedIn, and several Chinese internet companies, which solidified the firm’s reputation as good at identifying tech trends and also the companies best equipped to take advantage of these.
Data-Driven Due Diligence: Balancing Speed with Rigor
They analyze financial performance, understand the competitive landscape, and evaluate management teams – albeit with a more streamlined process compared to traditional investors.
Their research focuses on identifying companies with strong fundamentals and sustainable growth potential.
The firm leverages technology and data analytics to improve its investment decision-making, looking for an informational edge.
A Calculated Bet on Emerging Markets
Scott Shleifer, who co-founded Tiger Global’s private equity business in 2003, had a key role in identifying the growing Chinese internet market.
His advocacy for investments in Sina Corp., Sohu.com, and NetEase were highly profitable.
This success demonstrated Tiger Global’s ability to identify and take advantage of emerging market opportunities wherever they come from.
It basically boiled down to:
- what’s a growing trend
- where is it fastest growing
- what companies or investments would be best, factoring in valuations
Learning from Past Mistakes
Acknowledging Missteps: The 2008 Financial Crisis and 2022
An ill-timed investment in banks and cyclical stocks during the 2008 financial crisis hurt the fund.
2022 was also a bad year for Tiger Global. Interest rates rose by more than discounted, which severely hurt the value of its portfolio, given its longer duration.
These experiences served as a lesson in the importance of macroeconomic awareness and risk management, even for growth-focused investors.
The Perils of Premature Exits: Patience as a Virtue
The firm also recognized the opportunity cost of selling certain investments too early, including companies like Alibaba, Amazon, and Netflix.
These experiences underscored the difficulty in predicting the long-term growth trajectory of transformative companies.
At various points during their history, valuation models (using conservative estimates) may have said that they’re overvalued and it would take a lot for them to grow into their valuations.
Certain periods also produce higher valuations for just about everything.
But it highlighted the need for a longer-term investment horizon when dealing with high-growth, disruptive businesses.
Long-Term Growth: A Core Investment Principle
The firm’s investment philosophy centers on identifying companies with the potential for sustained growth over extended periods.
It also shows that their “private equity” thinking extends to public markets.
You can always see the price in public markets, but it won’t necessarily have a lot of importance for those looking to hold longer term.
Future Focus
Continued Emphasis on Technology: AI and Automation
Tiger Global has held its commitment to the technology sector despite its stumbles in 2022, with a particular interest on the ongoing trends related to artificial intelligence and automation.
They believe these technologies will be major drivers of economic growth and productivity gains in the coming decades, as more decision-making becomes automated and human skill sets in many professions increasingly go more toward strategic, creative tasks.
Global Expansion: Deepening Emerging Market Exposure
The firm continues to expand its global investment activities, with a focus on emerging markets like China (where it has a lot of experience) and India.
The growth in these countries comes down to their large populations, rising incomes, and increasing technology adoption.
Leveraging Data and Networks: Enhancing Investment Decisions
Tiger Global increasingly uses data analytics and technology to identify opportunities and refine its decision-making process.
Simultaneously, they maintain a strong network of industry contacts, including founders and other investors, to source deals and gain market intelligence.
This is also another point – taking advantage of trends relevant to their own business.
If they see the benefits of certain technologies in their own business, they’re often better positioned to recognize similar opportunities in the market.
This enables them to invest in innovations or partnerships that align with their expertise and can drive mutual growth.
Coleman’s Legacy
Talent and Learning Across Other Competitive Disciplines
The book Private Equity by Carrie Sun is believed to be written as an inside look of Tiger Global.
Tiger Global’s exceptionalism is portrayed through its ability to attract top-tier talent, even at support levels of the firm.
The secretaries are impressive individuals, many holding advanced or technical degrees and possessing sharp intellects that can answer difficult questions from investors and know when to defer to investment professionals.
This strategy reflects Tiger Global’s understanding that success and reputation requires excellence in every role.
The firm further reinforces this by inviting in guests to leverage the expertise of professionals from diverse, high-achievement fields as inspiration.
In Sun’s book, she mentions seeking to bring in Roger Federer to speak (who wasn’t able due to his tournament schedule) and a New York Rangers hockey Hall of Famer (believed to be Mark Messier).
His experience in a fiercely competitive sport provides unique insights into teamwork, strategy, good practice habits, and the psychology of sustained victory, translating directly to Tiger Global’s investment approach.
Incorporating these varied perspectives, the firm gains a multifaceted understanding of winning.
This approach signals a commitment to learning and applying winning principles from any source, as a way to maintain their competitive edge.
Return on Time
Sun’s book mentioned that the concept of return on time is central to their philosophy and operational strategy.
Time, like capital, is a finite resource. Accordingly, maximizing its utility is critical to their success.
This philosophy is evident in their belief in balancing quality with volume, so that the firm achieves not just high-quality portfolio companies/positions but also scales its operations efficiently.
Tiger Global’s approach to return on time is particularly reflected in their venture capital and private equity strategy.
Unlike traditional private equity firms, which may spend extensive time on exhaustive due diligence and operational involvement, Tiger Global streamlines its processes to rapidly identify, evaluate, and commit to promising investments.
It’s a form of the 80/20 rule.
This efficiency enables them to make deals quickly where speed matters, often outpacing competitors who may lose opportunities by moving too slowly.
Moreover, this focus on maximizing return on time extends to portfolio management.
Focusing on transformative sectors like technology, where the potential for exponential growth is highest, Tiger Global allocates its time and resources to areas with the greatest likelihood of outsized returns.
This minimizes distractions and ensures that efforts are concentrated on high-impact opportunities.
Additionally, Tiger Global’s relatively hands-off approach — avoiding operational control or board seats — further reflects their emphasis on time efficiency.
By trusting management teams and avoiding unnecessary micromanagement, they preserve time to pursue other opportunities, maintaining high deal volume without sacrificing strategic focus.
For Coleman, return on time is about leveraging every minute to drive value creation, even when it comes to communication in the firm.
Blending speed, scale, and strategic focus, Tiger Global tries to turn time into a properly valued resource, so that every decision, trade, investment, and strategy delivers the best possible return.
Firm Culture
It seems like a clichéd thing to say, but focusing on data-driven decision-making to objectively understand what’s happening is most important, as it helps avoid getting swept up in compelling yet potentially misleading narratives.
Coleman’s leadership style emphasizes many of the same things as Robertson – thorough research, a deep understanding of the targeted markets, and a commitment to long-term value creation.
It varies a lot from other traders we’ve featured, like Paul Tudor Jones or Louis Bacon who go toward higher-frequency, day trading type styles.
This disciplined approach permeates the firm’s investment process.
Calculated Risk-Taking
Coleman’s market philosophy involves a lot of calculated risk-taking in early-stage, high-growth companies.
This willingness to invest in potentially transformative businesses – even when the odds are against individual success – has been a key driver of Tiger Global’s success.
Some of the most successful VC firms (e.g., Sequoia) see zero return of capital in 60% or more of their deals.
Adaptation
Tiger Global’s willingness to acknowledge past mistakes and adjust its strategy accordingly demonstrates this commitment to ongoing improvement.
For example, their 2022 drawdown due to higher interest rates (and the impact of that on the present value of their portfolio) can involve learning on a variety of things, such as using interest rate derivatives for immunization purposes to reduce this risk.
Philanthropy
The establishment of the Tiger Global Philanthropic Venture, with a $220 million initial commitment, reflects Coleman’s and the firm’s dedication to social responsibility.
This initiative aligns their investment activities with broader societal goals, focusing on addressing inequality and poverty.
This philanthropic arm invests in early-stage nonprofits.
Quotes
In many of these articles, we have plenty of quotes as it’s good to hear directly from the source themselves rather than just what somebody else says.
But Coleman is notoriously private, shunning the spotlight and is generally wary of the press and giving interviews.
So many of his quotes come from investor letters.
“Julian Robertson had always believed that the right team, regardless of age or experience, could achieve great things through the power of hard work, fresh insights, and entrepreneurship.”
His quote referencing Julian Robertson, his mentor, highlights a core Tiger Global philosophy: “long talent, short experience.”
Instead of solely valuing seasoned veterans, they believe in the raw potential of individuals, regardless of their years in the field.
Hard work and a fresh perspective, Coleman implies, are more important than decades of experience in the same field, allowing for disruptive thinking and innovation.
Experienced people can also be more resistant to change or find it hard to change.
This echoes Robertson’s belief in the entrepreneurial spirit, suggesting that talented individuals, properly motivated, can improve quickly and achieve extraordinary results even without a long track record.
This focus on potential over tenure allows Tiger Global to identify exceptional talent early on, taking advantage of the energy and creativity of individuals eager to prove themselves.
“One humbling aspect of investing is that even in your best year as a private and public market investor, you are likely to lose money on at least one out of three individual investment ideas. Mistakes at the firm level can be far more costly. At a company level, we have lost money on the public and private sides in just about every way possible, including investing in non-dominant players, companies with unsustainable unit economics, and businesses that were led by unprincipled management teams.”
He acknowledges the inherent unknowns and risks in markets, even for the most successful firms, no matter how knowledgable or sophisticated.
He emphasizes that even during a banner year, a significant portion of individual investments, are expected to result in losses.
It’s always a humbling reality check, demonstrating that success isn’t about being right all the time but about maximizing wins and minimizing losses when you’re wrong.
Furthermore, he distinguishes between individual investment mistakes and firm-level errors, stating the latter are considerably more detrimental – i.e., process vs. result.
Coleman then provides specific examples of these costly firm-level mistakes.
These include backing companies that weren’t market leaders, those with flawed business models (“unsustainable unit economics”), and, critically, those led by unethical or incompetent management. (Coleman was among the many who tried shorting Tesla, with mixed results.)
This quote underlines that even the best traders/investors make mistakes, but learning from them, particularly at a firm level, is important for long-term success.
“In 2008, we veered too far outside of our focus areas with a negative view on banks and other cyclical industries, distracting us from owning the best Internet companies during the 2009 market recovery.”
In this quote, Coleman reflects on a specific strategic error made during the 2008 financial crisis.
He admits that Tiger Global, instead of adhering to its core expertise, became overly preoccupied with a bearish stance on sectors outside their “focus areas,” specifically banks and cyclical industries.
This deviation, based from a negative outlook on these sectors, ultimately proved to be a costly distraction.
While they were focused on these perceived troubled areas, they missed out on the resurgence of the best internet companies during the 2009 market recovery.
The critical lesson was the importance of staying disciplined and focused on one’s area of competence, even during periods of market volatility.
The quote highlights the opportunity cost of chasing perceived risks, particularly when it diverts attention from core strengths and emerging opportunities.
Essentially, Tiger Global’s attempt to be overly clever by betting against struggling sectors ultimately blinded them to the more significant upside in their own backyard.
“There is an even longer list of companies we have sold too early — Facebook, Peloton, LinkedIn, Amazon, and Netflix to name a few — only to turn around and repurchase a fraction of the shares we previously owned for far more capital.”
He highlights the challenges of timing the market and being tactical.
Coleman lists prominent examples of companies they exited prematurely, including giants like Facebook (Meta), Amazon, and Netflix.
This reveals a tendency to underestimate the long-term growth potential of certain investments, leading them to sell their shares “too early.”
They later rebought at a higher price.
This demonstrates the difficulty of accurately predicting a company’s trajectory and the high cost of failing to recognize its enduring value.
Compounding also adds up. For example, a 10% annual return is very good, but most people would shrug their shoulders. It’s more than a quadrupling in value every 15 years.
For their purposes, it shows the importance of a longer-term horizon, particularly in innovative, high-growth sectors.
It’s a reminder that even the most successful traders can be prone to doing many of the same things less experienced traders do, often regretting it later.
“In 2016, our exposure levels were too high relative to the expected returns of our underlying portfolio, causing us to play defense rather than offense during a steep market sell off.”
This quote reveals a key mistake Tiger Global made in 2016 related to risk management and portfolio construction.
Coleman admits that their “exposure levels” – meaning the overall amount of capital invested – were disproportionately high compared to the “expected returns” of their holdings.
In simpler terms, they were taking on too much risk for the potential reward they were likely to gain.
This imbalance left them vulnerable during a sharp market downturn.
Instead of being able to capitalize on the “steep market sell-off” by buying undervalued assets (playing “offense”), they were forced to focus on protecting their existing investments (playing “defense”).
This is a common mistake by amateur traders as well – being overly aggressive and not paying a lot of attention to risk management.
This highlights the importance of maintaining a balanced portfolio where risk is aligned with potential returns.
The quote demonstrates that even a successful firm like Tiger Global can be caught off guard if they become overly aggressive or fail to adequately assess the risk-reward profile of their portfolio, hindering their ability to react effectively to market fluctuations.
They had too many eggs in the basket that weren’t worth holding.
Conclusion
Combining the principles of traditional hedge fund investing with the aggressive approach of venture capital, focusing on technology, and maintaining a wide global perspective, Coleman has built a firm that has consistently outperformed the market while carrying a massive AUM.
His emphasis on analysis, calculated risk-taking, learning to stay ahead of the curve, and a long-term investment horizon provides a framework for dealing with modern markets.