As an emerging market specialist, hedge donor Robert Citrone is accustomed to observing the distant shores of his next investment.
His bet on Compass – and thus in the US housing market – goes much closer to home.
Discovery’s investment was not previously announced and its stake ranks second after SoftBank, which owns almost 35 percent of the intermediation. The other largest shareholders are co-founder Ori Allon, CEO Robert Reffkin and CTO Joseph Sirosh.
A former high school wrestler who grew up in Pittsburgh, 56-year-old Citrone, is one of a group of investors known as the Tiger Cubs who worked for hedge fund legend Julian Robertston at Tiger Management.
Citrone began his career as a corporate bond analyst at Fidelity in 1990 and joined Tiger in 1995. In 1999, he joined Discovery Capital Management in South Norwalk, Connecticut, where he raised capital from investors such as George Soros. and Robertson. In 2012, he and his wife Cindy became minority owners of the Pittsburgh Steelers. In 2017, he made the Forbes list of billionaires with net worth of $ 1.1 billion, but fell the following year after Discovery reported rough years of revenue.
Unlike their Twitter-active colleagues, such as Daniel Point’s Third Point or Point72’s Steven Cohen, Citrone receives little attention, rarely speaking at investment conferences or on television appearances. He said he preferred Hawaiian shirts and Steelers gear. According to a 2013 Wall Street Journal profile, it has a notoriously dirty office, but it bets very accurately in a number of areas.
“The guy is a walking encyclopedia,” Chris Shumway, a former Tiger colleague, told the Journal. “He won’t always be an expert on everything, but he tries to be an expert on the things that matter.”
Betting on housing
As a “macro” hedge fund, Discovery relied on broad market fluctuations and economic trends, especially in emerging markets.
It currently has $ 3.6 billion in assets under management, down from $ 12 billion in 2013, according to regulatory submissions. That year, its returns increased by 15 percent in the first half of the year, which, according to news reports, is one of the best results of a large hedge fund.
The following year, Discovery invested in Compass and joined Marc Benioff and Salesforce’s B-Series Advance Publications. It costs $ 40 million to launch. “We follow highly successful entrepreneurs and [Ori] Allon was one of them, “Discovery said in a statement. Prior to founding Compass, Allon sold startups to Google and Twitter.
After a rough few years, the fund returned and reported “burning gains” of 55.5 percent in 2020, according to Institutional investor. In January, it had a profit of 6.45 percent.
Today, according to WhaleWisdom’s portfolio, which collects data on asset managers, the fund’s portfolio is dominated by technology and health tips.
For example, Discovery owns 4.5 million shares of Palantir for data analysis, currently worth $ 107.7 million. It also holds $ 61 million in Fiserv, a financial technology company, and $ 60.7 million in computing giant Intel.
In a statement, Discovery said it had the support of “innovative companies shaping the future of their respective sectors,” citing early investments in Uber, Lyft, Spotify, Alibaba Group and Ant Group.
“We firmly believe that the technologies and tools that Compass creates for agents will help them grow their business and better serve their clients,” he said.
Regulatory submissions show that after the initial investment, Discovery increased its stake in Compass in 2018 and invested $ 15 million in the F-Series, led by SoftBank and the Qatari Investment Bureau. In connection with this investment, amounting to USD 118 per share, Discovery also offered an offer and bought shares worth USD 23 million from previous investors.
Road to IPO
Compass’ first supporters can now reap the greatest return on their IPO. Along with Discovery it includes 406 Ventures, Joshua Kushner’s Thrive Capital and real estate players
including LeFrak, the Naftali group and the Rudin family.
According to the Compass S-1, its sales were growing 56 percent in 2020 to $ 3.7 billion. It lost $ 270 million last year, down from $ 388 million in 2019.
In a letter to the founder included in the submission, CEO Robert Reffkin presented Compass’s vision of increasing agents’ productivity by providing them with new technology. The opponents have challenged this claim, arguing that Compass’ tools are elegant but not disruptive.
However, investors like Discovery believe differently. “Like Bloomberg for investment professionals or Adobe Create Suite for professional designers, Compass will change the way agents do business over time,” he said.