Hound Partners, a hedge fund launched with support from Julian Robertson’s Tiger Management, has filed a lawsuit to terminate a profit-sharing agreement dating back to 2004, according to a report by Bloomberg.
The deal provided Hound with startup capital from the late hedge fund legend in exchange for a share of its future profits.
The lawsuit, filed Monday in New York, alleges that Tiger Management failed to uphold its end of what Hound describes as a “marketing agreement.” Hound claims Tiger has already profited by more than $150m from its initial $23m investment, but its referrals of new investors have dwindled significantly in recent years. Hound, which managed $2.2bn as of December 2022, is seeking a court order to invalidate the agreement.
In response, Tiger Management filed its own lawsuit the same day, asserting the deal remains valid. The firm accuses Hound and its founder, Jonathan Auerbach, of exploiting Robertson’s 2022 passing to back out of an “ironclad” arrangement. Tiger contends that Robertson’s early support was instrumental in Hound’s success and that Auerbach is now attempting to retain a larger share of the fund’s revenue.
A spokesman for Hound stated, “We have greatly valued our longstanding relationship with Tiger Management, but Tiger’s conduct left Hound Partners with no choice.”
Tiger Management has declined to comment publicly but according to the firm’s lawsuit, the agreement entitles it to 12% of Hound’s gross performance fees. Tiger asserts that there is no termination clause in the agreement and denies breaching its terms. The firm also highlighted the transformative impact of its support on Hound, noting that the hedge fund continues to reference its Tiger “DNA” in marketing materials.
Hound, however, argues that the deal was renegotiated in 2011 to include marketing support, which it claims Tiger has failed to provide in recent years. The fund’s lawsuit states that Tiger made nearly 50 marketing referrals between 2012 and 2015 but has averaged fewer than one introduction per year since 2016.
Tiger’s lawsuit counters that Hound’s timing is suspicious, suggesting the termination attempt aligns with a period of significantly improved revenue at the firm. “It’s no coincidence that defendants’ purported termination comes in the first year in many years that Tiger is entitled to a significantly higher revenue share,” the lawsuit states.
