Billionaire Julian Robertson's Q1 Stock Picks

by: Insider Monkey

By Guan Wang

Julian Robertson is a legend in the hedge fund industry. He was the founder of Tiger Management Corp, one of the earliest hedge funds in the world. Many of the former employees at Tiger Management are currently running their own hedge funds. Known as "Tiger Cubs," several big names are included among their ranks, such as Lone Pine Capital's Stephen Mandel, Tiger Global Management's Chase Coleman and Blue Ridge Capital's John Griffin. These funds all generated strong returns recently, earning a spot among the best performing hedge funds we track. As their mentor, Robertson is undoubtedly worth following.

Let's take a closer look at Julian Robertson's latest top stock picks. His fund recently released its first quarter holdings in a 13F filing.

Apple Inc (NASDAQ:AAPL) is the largest position in Robertson's 13F portfolio at the end of the first quarter. It was also the top position in his fund at the end of last year. The stock has delivered spectacular returns so far this year, going up 37.83% so far, versus 7.33% for the S&P 500 index in the same period. We think Apple is attractively priced at 12X its 2012 earnings with an expected earnings growth rate of 20%.

We believe the stock will continue to outperform the market in the future - so does Robertson. He increased his bets on Apple by 13% over the first quarter of 2012. As of March 31, 2012, Robertson reported owning $53 million worth of Apple shares. Tiger Cubs Stephen Mandel, Chase Coleman, Andreas Halvorsen and Lee Ainslie are also bullish about Apple. Billionaire Jim Simons' Renaissance Technologies is also bullish on the company. The fund had $400 million-plus invested in Apple at the end of March (check out Simons' top stock picks).

Robertson is also bullish about tech giant Google Inc (NASDAQ:GOOG). It was the fifth largest position in Tiger Management's portfolio at the end of the first quarter, with the fund owning $20 million in Google shares at the end of March. With an expected earnings growth rate of 18%, Google also has an appealing P/E ratio of 18. Stephen Mandel, Chase Coleman and John Griffin were also in favor of Google (check out Chase Coleman's top stock picks). They each had $300 million-plus invested in Google at the end of last year.

Over the first quarter, Robertson also increased his bets on Goldman Sachs (NYSE:GS), boosting his stake in the company by 22%. In total, Tiger Management had $31 million invested in this financial stock at the end of the first quarter. Goldman Sachs is one of the most popular financial stocks among the hedge funds we track. There were 61 hedge funds with positions in Goldman Sachs at the end of last year. Boykin Curry was the most bullish about the company. His Eagle Capital had nearly $300 million invested in this position at the end of 2011.

Financial stocks struggled over the past year due to the European debt crisis. Though Goldman has already returned 10.66% since the beginning of this year, it still has not fully recovered from the 28.59% loss it endured over the past 52 weeks. The recent trading loss of JPMorgan Chase Co (NYSE:JPM) may indicate that there still exists relatively large downside risk in the financial sector. However, we think such risk has already been reflected in the stock price. Goldman is currently trading at 8X its 2012 earnings and its earnings are expected to grow at an average of 20% per year. Moreover, we think Goldman's leading position in the industry and diversified global footprint has to some extent reduced the risk to which it exposes investors.

Robertson also owns large stakes in MasterCard Inc (NYSE:MA) and Liberty Global Inc (NASDAQ:LBTYA). Tiger Management had $22 million invested in MasterCard and another $20 million invested in Liberty Global at the end of the first quarter. We view MasterCard as undervalued. Its forward P/E ratio of 15.8 is on par with the industry average of 15.96, but its expected earnings growth rate of 15.57% outpaces that of its competitors. Liberty Global also has a double-digit expected EPS growth rate. Chase Coleman and John Griffin are bullish about the company. Coleman has $500 million-plus invested in Liberty Global while Griffin has invested nearly $200 million in the stock (see John Griffin's top stock picks).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.