Keeping Perspective: Julian Robertson’s Last Letter To Investors

Growth stocks — and specifically large-cap tech stocks led by the FAANGs — have utterly crushed value stocks of late. It’s been the dominant theme of the past five years. Even the first quarter of 2018, which saw Facebook engulfed in a privacy scandal, saw growth outperform value.

Sector Benchmark Qtr. Return Large-Cap Growth S&P 500 Growth 1.58% Large-Cap Stocks S&P 500 -1.22% International MSCI EAFE Index -2.19% Utilities S&P 500 Utilities -3.30% Large-Cap Value S&P 500 Value -4.16% Real Estate Investment Trusts S&P U.S. REIT Index -9.16% Master Limited Partnerships Alerian MLP Index -11.22

Value stocks in general underperformed, and the cheapest of the cheap — master limited partnerships — got utterly obliterated.

So, is value investing dead?

Before you start digging its grave, consider the experience of Julian Robertson, one of the greatest money managers in history and the godfather of the modern hedge fund industry. Robertson produced an amazing track record of 32% compounded annual returns for nearly two decades in the 1980s and 1990s, crushing the S&P 500 and virtually all of his competitors. But the late 1990s tech bubble tripped him up, and he had two disappointing years in 1998 and 1999.

Facing client redemptions, Robertson opted to shut down his fund altogether. His parting words to investors are telling.

The following is the Julian Robertson’s final letter to his investors, dated March 30, 2000, written as he was in the process of shutting down Tiger Management: