Tiger Global Management’s Top Q4 Picks and Pans: Priceline (PCLN) and Twenty-First Century Fox (FOXA) Among the Favorites
February has been witness of hundreds of hedge fund 13F filings for the fourth quarter of 2013. In these forms funds disclose many of their long equity positions as of the end of December. We have found that the most popular small cap stocks among hedge funds outperformed the market by 18 percentage points even though we started measuring the returns a couple of weeks after 13Fs have been made public. It can also be productive to treat individual 13Fs as free recommendations from fund managers- not necessarily to be followed, but to be considered briefly and then researched further if they seem appealing.
In this article, I will succinctly analyze Chase Coleman and Feroz Dewan’s Tiger Global Management Llc’s equity portfolio. This fundamentally-oriented services-and-technology-focused hedge fund has an equity portfolio worth almost $6 billion. It tends to seek for ten-year investment opportunities, mainly in the global Internet and technology sectors.
Over 2013’s fourth quarter, Tiger Global increased its stakes in every one of its top ten holdings. In Priceline.com Inc (NASDAQ:PCLN), after already upping its stake by 20% over the third quarter, it reasserted its confidence in the company by increasing its bets by 23%. It now holds 708,000 shares, worth more than $907 million, which comprise more than 10% of its total equity portfolio. These moves are quite comprehensible, given Priceline.com Inc (NASDAQ:PCLN)'s industry leading margins and returns, great growth prospects, institutional backup, balanced debt levels and reasonable valuation.
On the second place is Twenty-First Century Fox Inc (NASDAQ:FOXA). The fund had started a position of 15.93 million shares in the media behemoth in Q3, and augmented it by 16% over the fourth quarter. Coleman and Dewan’s fund currently holds 18.59 million shares of the company, which account for 8% of its total equity portfolio’s value. A cheap valuation, decent margins and returns, and a small dividend yield make of Twenty-First Century Fox Inc (NASDAQ:FOXA) a worthy long-term investment, even in spite of its in-line-with-the-market EPS growth projections (18%-19% for the next five years).
Dollar General Corp. (NYSE:DG) also saw some action from Tiger Global. Over the last quarter of 2013, the fund boosted its position in the retailer by 31%, to 7.90 million shares (almost 6% of its total holdings). This company has been an analyst favorite for a while now. But not only researchers see value in this company. The fund must have also noticed the growth potential that Dollar General Corp. (NYSE:DG) holds and seems to have bet on its strong fundamentals and prospects going forward.
The fourth runner-up is TransDigm Group Incorporated (NYSE:TDG), a $9.2 billion market cap global designer, producer and supplier of aircraft components for use on commercial and military aircrafts in service. Tiger Global owns 2.62 million shares of the company, which makes it one of its top three hedge-fund shareholders.
I would also like to highlight Tiger Global´s new position at Restoration Hardware Holdings Inc (NYSE:RH). The fund acquired 1,817,935 shares during the fourth quarter, which account for approximately 1.5% of its total portfolio.
On the opposite, Coleman and Dewan’s fund reduced its stakes in two of its major holdings: Motorola Solutions Inc (NYSE:MSI) and Groupon Inc (NASDAQ:GRPN). It diminished its bets by 20% and 36%, respectively. These holdings now occupy the 15th and 19th places in our list, correspondingly.
Disclosure: Javier Hasse holds no position in any stocks mentioned