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Chase Coleman has returned market-beating over 20% compounded returns since his fund inception in 2001. Its major new conviction buys and holds include online movie rental subscription service Netflix Inc. (NASDAQ:NFLX), online retailer Amazon.com (NASDAQ:AMZN), travel services provider Priceline.com (NASDAQ:PCLN), broadband and satellite services provider Liberty Global (NASDAQ:LBTYA), Chinese Internet TV Company Youku.com (NYSE:YOKU), Apple (NASDAQ:AAPL), Latin American marketplace services provider Mercadolibre Inc. (NASDAQ:MELI), RenaissanceRe Holdings (NYSE:RNR), and Indian travel services provider Makemytrip Ltd. (NASDAQ:MMYT). Its conviction sells include China-based hotel and airline ticket consolidator Ctrip.com (NASDAQ:CTRP) and video game software and content developer Electronic Arts Inc. (ERTS).
New York-based Hedge Fund Tiger Global Management, headed by Tiger Cub and Star Manager Chase Coleman, manages $4.1 billion and invests mainly in equities in the technology and services sectors. Coleman, like fellow hedge fund veterans Stephen Mandel at Lone Pine Capital LLC, John Griffin at Blue Ridge Capital Holdings LLC and Lee Ainslie at Maverick Capital, is a Tiger Cub, meaning that he honed his investment skills while working for legendary hedge fund manager Julian Robertson at Tiger Management LLC. The fund is a long/short equity fund, and it has returned over 20% compounded annual returns since inception in 2001, including a 47% average annual return from 2001-07.
The fund holds a concentrated portfolio of 36 positions, with 60% of its holdings in large caps, 30% in mid caps, and small caps accounting for the remaining 10% of its holdings. Its portfolio turnover is 100% implying an average holding period of one year. Based on the most recent SEC 13-F filing for the March 2011 quarter, we determined that the portfolio is mostly concentrated in the service sector, which accounts for 60% of the holdings, another 25% are in the technology sector, 10% in the finance sector and the rest of the sectors together accounting for 5% of holdings.

The following summarizes the largest new buys and sells in the latest reported 13-F filing for the March 2011 quarter, and updated based on any 13-G filings since the end of the quarter:

  • Service sector: The fund added $100 million to its prior quarter $2.28 billion position in the service sector. However, this was accomplished by significant re-shuffling of its sector holdings, including adding a large new $198 million position in online movie rental subscription service Netflix Inc. and adding $74 million to its prior $180 million position in online retailer Amazon.com Inc. This was balanced by selling $117 million in satellite-based TV programming services provider DirecTV (NASDAQ:DTV), selling $65 million in QVC holding company Liberty Media (LINTA), and selling $55 million in Ctrip.com. The fund also maintains a large $245 million position in Priceline.com Inc. that provides airline ticket, hotel room, car rental, vacation package and cruise services through Priceline.com, and a large $314 million position in Liberty Global Inc. that is a holding company that owns cable broadband and satellite subsidiaries. The position in AMZN was taken in early 2010 in the $120s, so adding even more in the $190s is a conviction buy. The position in DTV was taken at the end of 2009 in the $30 range, so the fund selling some near $50 is profit-taking. The position in LINTA was taken in early 2010 in the low-teens, so the selling of a quarter of that position in the high-teens is profit-taking. The position in CTRP was taken in the previous December 2010 quarter in the mid-$40s, so the fund selling it in the mid-$40s three months later indicates that this is a conviction sell. The position in PCLN was initiated in early 2009 in the $80s, so adding to this position in the $500 range indicates a high level of conviction. The position in LBTYA was initiated in late 2009 in the low-$20s, so adding even $6 million to this position in the $40s is a high conviction buy.
  • Technology sector: The fund sold $39 million from its prior quarter $1.05 billion position in the technology sector. However, this too was accomplished by significant re-shuffling of its sector holdings, including initiating a new $54 million position in Chinese Internet TV Company Youku.com, selling $156 million in video game software and content developer Electronic Arts, and adding $99 million to its prior $396 million position in Apple. Also, it maintains a large $267 million in online marketplace and electronic payment services provider for Latin American markets Mercadolibre Inc. The position in ERTS was initiated in mid-2009 in the $20 range, so the selling out in the $20 range in the March 2011 quarter is a conviction sell. The position in AAPL was initiated in early 2008 in $140s, so the adding of 20% more in $320s is a high conviction buy. The position in MELI was initiated in mid-2007 in mid-$20s, so maintaining such a large position in the $80s indicates a high conviction hold.
  • Finance sector: The fund added $30 million to its prior quarter $345 million position in the finance sector, including adding a new $101 million in RenaissanceRe Holdings (RNR), which offers property catastrophe, specialty and individual risk coverage for insurance and re-insurance firms worldwide.
  • Also, since the end of the March 2011 quarter, it bought into a new $140 million position in Makemytrip Ltd. (MMYT), an India-based provider of online travel services primarily for individual travelers via www.makemytrip.com.

Table

Company
Ticker
Action
Market Value at end of March 2011 Quarter
Change in Value from Prior Quarter
Percent of Portfolio
Percent Shares Owned
Netflix Inc.
NFLX
New
$ 198 million
$198 million
4.81%
1.59%
Electronic Arts Inc.
ERTS
Drop
$ 0 million
($156) million
0.00%
0.00%
DirecTV
DTV
Cut
$ 179 million
($117) million
4.35%
0.50%
Renaissancere Holdings Ltd.
RNR
New
$ 101 million
$101 million
2.44%
2.82%
Apple Inc.
AAPL
Add
$ 493 million
$99 million
11.99%
0.15%
Amazon.com Inc.
AMZN
Add
$ 254 million
$74 million
6.17%
0.31%
Liberty Media Corp.
LINTA
Cut
$ 198 million
($65) million
4.81%
3.62%
Ctrip Com Intl Ltd.
CTRP
Drop
$ 0 million
($55) million
0.00%
0.00%
Youku Com Inc.
YOKU
New
$ 54 million
$54 million
1.31%
0.08%
Liberty Global Inc.
LBTYA
Add
$ 314 million
$6 million
7.95%
6.44%
Mercadolibre Inc.
MELI
Same
$ 267 million
$0 million
6.49%
7.42%
Priceline.com Inc.
PCLN
Add
$ 245 million
$14 million
5.95%
0.97%
Section 13-G Filing Since End of Quarter
Makemytrip Ltd.
MMYT
New
$140 million
$140 million
3.4%
17.0%
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my ‘opinions’ and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Top Sector Buys and Sells of Tiger Global Management