5 Big-Time Bets in This Tiger Cub’s Hedge Fund
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Manish Chopra founded Tiger Veda Management in 2006 after leaving Tiger Management and Julian Robertson, one of the hedge fund industry's most revered mentors. As you can probably guess, Chopra's history makes him a member of the vaunted "Tiger Cub" community, which consists of a number of high-performing money managers like John Griffin, Stephen Mandel and Lee Ainslie.
On the whole, Chopra and Tiger Veda oversee a smaller portfolio than the majority of their peers, with $300-$400 million in assets under management, and a 13F portfolio worth a little over $240 million. Like the Buffetts and Einhorns of the hedge fund world (see Warren Buffett's portfolio here), Tiger Veda's capital base is concentrated in a small number of companies - 15 to be exact.
With Tiger Veda's top five stock picks accounting for a little over half of its 13F portfolio, this strategy has proven to be quite successful of late, as the fund returned 14.8% last quarter. Let's take a look at Tiger Veda's top five, to determine if they're stocks individual investors should consider buying. During the third quarter of this year Manish Chopra's stock portfolio did perform better than 370 of the 400 funds we track.
According to its 13F filing with the SEC, Tiger Veda's top stock pick is Loral Space & Communications (NASDAQ: LORL), which accounts for 15% of the fund's 13F portfolio. Since the end of this year's first quarter, Chopra has boosted his stake in the satellite communications company by over 130%. Between April 1 and December 1, shares of Loral Space had risen by over 6% to hit an all-time high of $85.84, but a $29.00 (37% yield) special dividend on December 5 pushed the stock down to the mid-$50 range.
Going forward, a recent sale of its satellite manufacturing segment leaves Loral Space to focus on satellite services, but investors can still get a decent value play post-dividend at 10 times earnings, and the sell-side expects higher adjusted EPS growth (18%) next year than this year (16.3%). Another prominent hedge fund manager invested in Loral and the end of Q3 was Leon Cooperman, who owns nearly 20% more of the stock than Chopra. (Here’s a full look at Leon Cooperman's newest stock picks.)
Google (NASDAQ: GOOG) is Tiger Veda's second largest 13F holding, and accounts for a little over 10% of the fund's portfolio. Chopra has more than doubled his position in the tech giant since the start of 2012, and his conviction has paid off in the past six months, as shares of GOOG are up 22.6%. From a market share standpoint, Google's core business has never been better; the company's search engine beat its own record in November, capturing 66.9% of the U.S. search market according to comScore.
While Google did miss Q3 earnings on a rather embarrassing accidental release, Wall Street still expects it to post annual EPS growth of 15-16% over the intermediate term. At 15 times forward earnings and a price-to-cash per share of 5, there's still some value to be had here. Most prominent analysts agree; Barclays and Cantor Fitzgerald both hold price targets close to $100 higher than Google's current share price.
Macquarie Infrastructure Company (NYSE: MIC) is the third pick in Tiger Veda's equity portfolio, and the heavily diversified infrastructure company has proven its worth, returning close to 60% year-to-date. Macquarie's appreciation appears to be driven by its superior top line record, in which revenues have beaten the Street's estimates in five straight quarters. In its latest Q3 financials, though, EPS missed targets considerably, finishing at a loss of 4 cents versus an 18-cent consensus.
Wall Street still expects annual EPS growth of 11% over the next five years, driven by a bullish aviation fuel price outlook, and shares also pay a 6.2% dividend yield. Bears will point out Macquarie's 57x trailing P/E is a reason to be wary, but a forward P/E near 11 indicates that investors may actually be under-appreciative of earnings potential.
Chopra's fourth stock pick is likely familiar to most readers: the embattled Apple (NASDAQ: AAPL). To be fair, the company itself isn't that "embattled" with revenue and EPS growth out the wazoo, but the investor psychology surrounding this stock has been extremely intriguing. Shares of Apple have lost over 18% since September, and with the dreaded "death cross" in play, many technical analysts fear that more selling is in store.
Fundamentally speaking, you'd have to be crazy not to be attracted to this stock, which trades at 9 times forward earnings and a PEG near 0.6, but bottom line growth is slowing, and some analysts expect market share leads in the tablet arena to decline going forward. Still, we love Apple's potential at these levels, and think that a positive growth driver like an 'iTV' announcement or a deal with China Mobile would help shares reach a fairer valuation. Aside from Tiger Veda, other hedge funds that are sticking with Apple include David Einhorn and Ken Fisher. See David Einhorn's favorite stocks.
Last but certainly not least, Royal Caribbean Cruises (NYSE: RCL) sits at the No. 5 spot in Tiger Veda's 13F portfolio. Over the past six months, shares of Royal Caribbean have gained close to 50%, on the back of industry-wide consolidation and rising consumer sentiment. The multi-billion dollar cruise operator has met the Street's revenue estimates in every quarter of 2012, and consensus expects it to finish the year booking total sales of $7.7 billion.
By the end of 2013, this estimate stretches to $8.1 billion, and while high petro costs will always be a concern, it's notable that the sell-side actually expects earnings growth to speed up over the next half-decade. Early forecasts predict annual EPS growth of 10% versus the negative 1.2% rate Royal Caribbean has averaged since 2007. Throw in a dividend yield of 1.4% that acts as a proverbial "cherry on top," and it's easy to see why Manish Chopra is so bullish on the stock. For a longer look at the hedge fund manager's portfolio, continue reading at Insider Monkey.
This article is written by Jake Mann and edited by Meena Krishnamsetty. Meena has long positions in Apple and Google. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. 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!