Months before Zillow and Trulia announced their $3.5 billion merger on July 28, New York City hedge-fund manager Charles P. Coleman III was betting big on online real estate listings.
From Tiger Global Management’s Midtown office, on the 35th floor of 9 West 57th Street, Coleman, who goes by Chase, and his team of notoriously prescient partners gobbled up sizeable chunks of stock in both companies. By the time the deal was announced, Tiger held a 9.4 percent stake in Zillow and a 4.6 percent stake in Trulia, making it Zillow’s second-largest shareholder and Trulia’s fifth-largest.
The Zillow-Trulia investment was arguably the firm’s biggest real estate play to date, but it could be a harbinger of things to come — especially considering Tiger’s increasing appetite for real estate technology over the past 18 months.
Known for investing early in Facebook and making nearly $1 billion when the social networking site went public in 2012, Tiger led a $50 million investment in the online brokerage Redfin this past November. In January, it joined Accel India in investing $10.4 million in CommonFloor, an Indian real estate listings site.
Dan Miller, co-founder of real estate crowd-funding site Fundrise, said Tiger’s reputation is stellar in real estate tech circles. “They’re well regarded as one of the smarter tech investors in Series B and C stage [fundraising] when there’s real growth potential,” Miller said.
Analysts said Tiger, and other investors, probably accelerated Zillow’s six-week courtship of its one-time competitor. James Cakmak, an analyst at Telsey Advisory Group, an equity research firm and brokerage, said the shareholder base of both companies became increasingly aligned in the months before the deal. That “may have helped move the dialogue between the companies quicker,” he said.
In general, Wall Street liked the $3.5 billion all-stock acquisition, which could turn into another big payday for Coleman. Since last year, Zillow’s stock price has nearly doubled and Trulia’s hasn’t been far behind. After buying an initial stake in Zillow and Trulia, Tiger upped its stake in Zillow in August to roughly 9.5 percent of the company valued at $433.7 million.
Old money
A descendant of Peter Stuyvesant, the last Dutch governor of New York, Coleman’s pedigree is old New York money.
In 2008, he and his wife Stephanie Ercklentz paid $36.5 million for two apartments at 4 East 66th Street that were formerly owned by Veronica Hearst, the widow of William Randolph Hearst’s son Randolph.
Most of Coleman’s wealth comes from Tiger Global — a $15 billion firm he launched in 2001, which has reportedly had returns exceeding 20 percent for the past three years.
After graduating from Williams College in 1997, Coleman landed a job as an investment analyst at hedge fund manager Julian Robertson’s Tiger Management. He quickly became one of Robertston’s protégés. In 2001, Coleman launched Tiger Global with $25 million in seed money from Robertson. Two years later, he added a venture capital arm.
While notoriously media-shy, Coleman, who declined to be interviewed, has since multiplied that seed money many times over. Last year, Coleman, 39, was one of the top 25 highest paid hedge-fund managers, according to Forbes, which pegged his net worth at $1.9 billion.
Betting on real estate
While real estate isn’t Tiger’s bread and butter, sources said Coleman has recognized an opportunity in the sector much like he did with Facebook, LinkedIn and Zynga.
Scott Shleifer, who runs the venture capital division with Lee Fixel, brought the Zillow-Trulia investment to Coleman’s attention and put together the deal, sources said.
“They are very sharp investors and they look for trends that can really have a big impact industry-wide,” said Riggs Kubiak, CEO of Honest Buildings, an online marketplace connecting developers and real estate vendors, who’s had several meetings with the Tiger team.
Glenn Kelman, CEO of Redfin, said investors have become increasingly convinced of the importance technology could play in real estate, particularly the residential side. “All of a sudden they see everything as up for grabs,” he said.