3 Biggest Positions in Chase Coleman's Portfolio

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Chase Coleman, a young and successful hedge fund manager, has been quite successful in technology/start-up investing. He founded Tiger Global Management, with the seed money from Julian Robertson. He has a strong track record of investing in internet and technology companies before they go public. Since its establishment in 2001, it has managed to delivered annualized return of more than 21% and now it has more than $7 billion AUM.

Recently, the fund reported an increase in ownership of Groupon (NASDAQ: GRPN) now owning 65 million shares, accounting for 9.9% of the total company. Coleman first bought Groupon in the third quarter with 1.3 million shares purchased at around $6.25 per share. Investors seem to be pessimistic about Groupon’s future due to the increasing competition from AmazonLocal, Travelzoo, and LivingSocial in this “low barrier to entry” business. At the current price of $3.88 per share, his 65 million shares would be worth $252 million. However, Groupon is not the top holding among his 43 positions. His top three holdings as of September are Apple (NASDAQ: AAPL), Yandex NV (NASDAQ: YNDX) and Google (NASDAQ: GOOG).

Coleman owns 1.3 million shares of Apple, with the total reported value of more than $867 million. Coleman sold some of his Apple position in the last quarter, but it is still his largest holding, accounting for more than 12% of the total portfolio. Apple seems to be the popular bet for hedge fund managers including George Soros, Ken Fisher, and David Einhorn. Einhorn owns more than 1 million Apple shares, with the total value of nearly $730 million, accounting for more than 12% of his total portfolio. Einhorn expressed his belief that Apple could hit a $1 trillion market cap because of Apple was a software company with its own operating system with its own high-margin device. It was all interconnected between iOS, App store, iTunes, and iPhone, iPad, Mac. Apple’s shares have been beaten down from its $700 mark in September and now trades at $561.70 per share, with a total market capitalization of nearly $528.4 billion. The market is valuing at 9.1x forward earnings and only 0.5x PEG.

Yandex ranks the second biggest position in Coleman’s portfolio with 23.5 million shares. His total Yandex position value was around $568 million, accounting for 8% of his portfolio.  Coleman has invested in Yandex before its IPO, with 62.3 million shares, or a 71% stake in the company. Yandex is a quite popular search website for Eastern European and Russian people. According to Comscore.com, Yandex had around 150 million searches per day and more than 25.5 million daily visitors. It currently has a 60% market share in the search engine industry in Russia. Currently, it is trading at $22.46 per share, with a total market capitalization of $7.35 billion. The market is valuing Yandex at 23.1x forward P/E and 0.7x PEG.

Google made the third largest position in Coleman’s portfolio with 698,000 shares. With the total value of around $527 million, it accounted for 7.4% of his total portfolio. Google is the largest and the most widespread global search engine. Despite its non-existence in China, the biggest population in the world, it still owns 88.8% of the global search engine market share, according to Karmasnack. Baidu (NASDAQ: BIDU), Google’s small competitor, which serves the Chinese market, only accounts for 3.5% of the total global search engine industry. Both Google and Baidu have experienced a significant decline recently. Google moved down from $768 per share in October to $665.87 currently, with $218.8 billion in market capitalization. Baidu had been a worse performer by falling from $134 in August to only $93.24 per share, with the total market capitalization of $32.6 billion. It seems to be pricier in terms of valuations compared to Groupon and Yandex with 15.1x forward earnings and 1x P/B.

My Foolish Take

Groupon, with around 54% market share in a discounted market place industry, is still a market leader. However, investors’ pessimisms make sense because the growing competition from AmazonLocal with Amazon’s huge and reputable database would pose a huge threat to Groupon. Groupon could be an opportunistic play on the market pessimism itself with the low market price. Apple and Google are still both value and growth stories in the businesses themselves. With the market leading positions in the tablet market for Apple and search engine market for Google, those two stocks would be worth to be in the long-term investors’ portfolios.

 


hoangquocanh has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Baidu, and Google. Motley Fool newsletter services recommend Apple, Baidu, Google, and Yandex. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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