Fact-Checking With Tiger Global
Ishfaque is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Editor's Note: This version has been modified to better describe the relationship between Chase Coleman, his fund, and its holdings.
Unlike numerous other hedge fund managers, Tiger Global's Chase Coleman doesn't self-advertise. The publicity-shy Coleman has every right to brag about himself, as his funds are amongst the top performers in the hedge fund universe that manage over a billion dollars, according to Bloomberg. Even though it’s never a good idea to follow marquee investment managers blindly, it’s a wise idea to engage in fact-checking with them periodically.
Tiger Global's knack for picking out high-potential growth companies, especially in pre-IPO technology companies, is phenomenal and his returns clearly suggest that. Let’s take a look at 5 of his leading technology picks and his possible investment thesis or rationale behind these picks listed on the 13F filing released on Valentine’s Day.
1. Apple (NASDAQ: AAPL): No surprises here, Coleman likes Apple. In fact, it’s his biggest holding with an investment of more than $558 million. Apple's stock has been hit hard in the last 5-6 months amidst worries about slower pace of innovation and margin compression. In spite of achieving record revenue levels, the stock is languishing near 52 week lows.
The company is under pressure from shareholders and activist investors like Einhorn to return a portion of its $137 billion cash hoard in the form of dividends or a share repurchase. Apple's valuation is very attractive and the stock has a decent amount of upside left.
2. Yandex (NASDAQ: YNDX): Tiger Global has backed the Russian search giant for a while now. He was an early backer of Yandex before the company did its IPO in 2011. Tiger Global holds a stake of $330 million in the ever growing search giant.
Yandex's top line revenues have been growing rapidly, and its grip on the search engine space in Russia is rock solid with a roughly 62% market share. In addition, the company is making inroads into other growing European countries like Turkey, and expanding into e-payments as well.
Yandex just ousted Bing to claim the title of the fourth largest search engine in the world, with a global market share of more than 2.8%. Coleman thinks that Yandex still has a lot of upside left and it’s pretty clear why.
3. Amazon.com (NASDAQ: AMZN): Tiger Global holds a stake of more than $311 million in the disruptive technology and retail giant. Amazon continues to dominate and disrupt the eCommerce space, while gaining ground in the tablet and e-reader devices market with its line of Kindle and Kindle Fire devices.
In addition, Amazon's cloud computing arm, Amazon Web Services is a leading cloud computing player, and is expected to grow rapidly in the coming years. Also, Amazon is investing heavily with its wide array of Video offerings, and is now in the process of releasing a number of exclusive and original content shows with Amazon Studios.
4. Yahoo (NASDAQ: YHOO): Tiger's Feroz Dewan is a believer in Yahoo's undervaluation and holds a sizable stake of $278 million. And rightly so, with a new management team in place and substantial amounts of share repurchases in the pipeline owing to its partial sale of Alibaba, Yahoo has a lot of upside. Yahoo is slated to do an additional share buy-back of more than $1.5 billion, which should drive the stock higher.
More importantly, Yahoo's stakes in both Alibaba and Yahoo Japan are both underpriced in its balance sheet, and have a much higher intrinsic value. In particular, the 24% stake in Alibaba is worth a lot more, and should be a major catalyst for Yahoo's fortunes once Alibaba conducts a widely anticipated IPO in the coming years.
5. Groupon (NASDAQ: GRPN): Tiger Global has a stake of 9.9% in the daily deals pioneer, Groupon which is valued at more than $315 million. This might be a head scratcher for some investors, but Groupon has enormous upside. The company's business model is in rapid transition and should do well over time.
Groupon is slowly evolving from a standalone daily deals company to newer business segments like Groupon Goods. In addition, the firm's merchant relationships are becoming more sticky owing to the value added services that Groupon provides like low-cost payment services and customer handling apps.
A big competitive advantage of Groupon is the large number of merchant relationships in place, which are hard for other companies to replicate overnight. With the stock trading at a fraction of its 52 week highs, Groupon has bagger potential.
The Bottom Line
It’s never a good idea to follow marquee investors blindly. And one should do their own research heavily before making investment decisions. Tracking highly successful and low key buy-and-hold investors like Chase Coleman is always a good idea, at least for matching notes.
ishfaque has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Yandex. The Motley Fool owns shares of Amazon.com and Apple. 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!