Philippe Laffont

Philippe Laffont is a part of the founders of the first generation of "Tiger Cub" hedge funds, sharing the limelight with shops such as Blue Ridge (John Griffin), Lone Pine (Stephen Mandel), Maverick (Lee Ainslie), Viking Global (Andreas Halvorsen), and Tiger Global (Chase Coleman).

Before entering finance, Philippe's passion was in computers and technology. This fascination led him to apply to the Massachusetts Institute of Technology (MIT), where he was accepted in 1985. Despite obtaining an MS in Computer Science from MIT, his initial attempts to join the West Coast tech scene were met with rejections from three different departments of Apple Computer, which compelled him to take a position at McKinsey's Madrid office.

While working in Spain, Philippe met his future wife Ana Isabel Diez de Rivera, who hailed from an influential Spanish family.

Despite Philippe's desire to return to the United States, Ana wished to remain in Spain. The compromise they reached led Philippe to spend a year working for Ana's family business, an experience that saw him relegated to a basement office with minimal responsibilities.

During this time, Philippe turned to stock listings in the Herald Tribune to fill his idle hours, sparking his interest in stock investing. His early investments included Microsoft, Intel, and Dell. Philippe's brother, Thomas, residing in California, became a confidant with whom he shared investment ideas.

Philippe did well in his investments. However, even today, Philippe recognizes the role of luck in his early successes during favorable market conditions.

A year later, Philippe and Ana moved to America, where he faced the challenge of breaking into the investment management industry with a computer science background and limited connections. Philippe had to work for a mutual fund unpaid, eventually meeting someone at a conference who introduced him to Tiger Management.

His MIT resume landed him in Tiger's IT department, where the firm had no IT openings. So he was initially rejected.

Through a friend of a friend, Philippe got an introduction to Julian Robertson, but Philippe was given only two minutes. Philippe got right to the point and told Julian he wanted to pick tech stocks at Tiger Management. Julian connected Philippe with his tech analysts. Interviews later, he got the job.

Philippe spent the next three-and-a-half years honing his skills at Tiger Management. He has a natural aptitude for numbers and the ability to identify issues in complex spreadsheets with remarkable precision. But what’s most valuable is his ability to translate details into big investment decisions, a key skill as a portfolio manager whose responsibility lies in monetizing ideas with appropriate sizing.

More to come:

• Founding Coatue

• Products and Fee Structure

• Org Structure

• Research Process

• How to get a job there

• Firm culture

Founding Coatue

In 1999, Philippe Laffont founded Coatue Management, with a modest $15 million AUM. The inspiration for the firm's name came from Laffont's fondness for a Nantucket beach.

The initial years of Coatue's investment journey were marked by a formidable challenge — the markets experienced a staggering 75% drawdown, with the Nasdaq plummeting from $5,000 on February 1, 2000, to $1,200 by 2003.

Thankfully, Coatue’s ability to navigate through the unprecedented period earned the attention and confidence of additional investors, solidifying the firm’s position in the competitive hedge fund landscape.

In 2003, Philippe's brother, Thomas, joined Coatue, focusing on private investments. This strategic addition bolstered the firm's capabilities and expanded its scope, following the footsteps of peers such as Tiger Global.

Coatue Management is headquartered in the Solow Building in New York City, where they share the building with other notable hedge funds such as Tiger Global, D1 Capital, Sculptor Capital (Och-Ziff), mutual fund Ruane Cunniff Goldfarb (also known as Sequoia Fund) and the private equity firm Apollo.

Investment Products

As of the end of May 2023, Coatue Management manages $47.9 billion. The firm's strategies are organized into three buckets: public, private, and hybrid.

In public, Coatue has both hedge fund and long-only strategies.

In privates, Coatue does mid- and late-stage growth investments but also has a venture arm focusing on early-stage.

Additionally, Coatue provides Tactical Solutions which invest in both public and private sectors through Special Purpose Vehicles (SPVs).

Coatue is mostly a global TMT and consumer shop, but it does dabble in healthcare, healthcare technology, and life science sectors.

Fee structure

Coatue’s fee structure depends on specific offering memorandum.

• Management fee ranges from 0-250 bps.

• Performance fee varies between 10% and 33% of realized or unrealized net profits/capital appreciation.

One distinctive aspect of Coatue's strategy is the individual "scorecard" maintained for each standalone fund. This allows limited partners (LPs) to assess the performance of each strategy independently, enabling informed decision-making based on the success of specific investment approaches.

A former investor noted that Coatue's preference for distinct funds and strategies is disadvantageous versus Tiger Global’s commingled and thus less transparent approach.

Investment team profile

The firm’s power now clearly rests with the Laffont brothers, Philippe and Thomas, especially after star stock picker Daniel Senft left in mid-2024 to launch his own shop. Philippe Laffont remains the ultimate decision-maker and portfolio manager.

Looking at the 52 data points I gathered on current and former investment team members, their educational background is more diverse compared to other Tiger Cub peers. At the undergraduate level, Harvard and Wharton lead with six reps each. Other Ivies like Yale, Dartmouth, Princeton, Cornell, Columbia, and Brown contribute between two and four members each, complemented by NYU (3), Georgetown (2), UVA (2), and Michigan (2).

Only 9 out of the 52 have an MBA, indicating that an MBA isn’t a major talent pipeline for the firm. Of those, 4 graduated from HBS, 3 from Columbia, 1 from Wharton, and 1 from UT Austin McCombs.

On the professional side, the most common backgrounds—unsurprisingly—are investment banking and 2+2 programs, with folks coming from Goldman Sachs, Morgan Stanley IB, and KKR, Blackstone, and Providence PE (but no Carlyle).

They’ve also hired from other hedge funds, including multi-managers like Citadel, Millennium, BAM, and other Tiger-style funds such as Lone Pine, Maverick, and Light Street.

A few hires have come from consulting, specifically McKinsey and BCG, though none from Bain.

Diligence Process

Coatue’s investment philosophy centers on a top-down analysis, concentrating on themes and major trends that could impact various sectors. This thematic focus guides their investment decisions. That said, it’s not different from Stephen Mandel’s approach to investing behind changes.

On short positions, Coatue seeks companies with concrete evidence of financial deterioration reflected in the balance sheet or income statement. Their shorts are sometimes rooted in the same thematic analysis applied to their long positions. They may short companies perceived as market share losers based on the long-term winners they have identified.

Similar to its Tiger Cub peers, Coatue puts heavy emphasis on the evaluation of management teams. Company visits and direct management interactions are highly valued.

The firm also actively engages with competitors, consultants, sell-side and buy-side analysts to gather comprehensive insights. Similar to Maverick Capital, Coatue houses a dedicated data science team, underlining its commitment to leveraging technology for investment analysis.

The firm made an effort to build a quant investment strategy, but the result was disastrous.

How to get a job at Coatue

Philippe emphasizes brands in hiring decisions. He values the high-pressure training that comes with 2-3 years of working in elite investment banking or management consulting. The importance he places on spending time in a highly competitive, high-testosterone environment resonates in Coatue's culture in a later section.

Philippe underscores the challenges of a direct path from undergraduate to a hedge fund, emphasizing the smaller, entrepreneurial nature of hedge funds means the immediate need for juniors to make meaningful contributions while not receiving much training. Therefore, he advocates for the structured training provided by established institutions such as Goldman Sachs and McKinsey.

Candidates with a "2+2" (2 years in elite IB and 2 years in elite PE) profile are favored. The firm values the diligence skills learned in private equity. Candidates I have spoken with have indicated the interviews prioritize research skills over transaction experience.

Additionally, the firm has hired analysts with experience at other elite hedge funds. Finally, there have been instances of hires from investment banking programs. However, they are exceptions, not the rule.

Despite the tough culture based on public forums, Coatue pays handsomely given its scale and fee structure. Additionally, as a Tiger Cub hedge fund, the firm still commands a premium for an ex-employee’s search for the next seat in public investing. It ultimately comes down to how much you want to put up with.