Christopher Hansen founded Valiant Capital Management in 2008 and the fund currently has about $2.7 billion in assets under management. Valiant recently filed its 13F with the SEC, disclosing many of its long equity positions from the end of December. While we’re particularly excited about using our database of 13F filings to develop investing strategies- for example, in our August newsletter we listed the most popular small cap stocks among hedge funds, a set of stocks which then outperformed the S&P 500 by 18 percentage points between September and January (read more about our hedge fund strategies)– we think that it can also be useful to look at individual funds’ 13Fs to see what stocks they like and what the investment team is thinking about the broader markets. Read on for our quick take on Valiant’s five largest holdings and compare them to previous filings.
Apple Inc. (NASDAQ:AAPL) was the most popular stock among hedge funds in the third quarter of 2012 (see the full top ten list) and Valiant increased its holdings of the technology company during Q4 to a total of about 310,000 shares. Apple Inc. (NASDAQ:AAPL) has now reached the point where its stock price is down from a year ago against a rising market. It now trades at 10 times trailing earnings as the markets worry about the company either losing market share or suffering poorer margins, leading to lower earnings in the long term in either case. We think that that Apple Inc. (NASDAQ:AAPL) is probably undervalued at that price.
We’re not as bullish on Valiant’s second largest holding by market value, Facebook Inc (NASDAQ:FB). The fund had initiated a position of 1.5 million shares in the third quarter, and reported owning 3.8 million shares at the end of December. Facebook Inc (NASDAQ:FB)’s forward P/E- for 2014- is 38, and the company is expected to see high earnings growth between now and then. While Facebook Inc (NASDAQ:FB)’s revenue growth has been strong, costs have also been rising and we’re not confident it has an effective monetization strategy. Tiger Global Management is another major shareholder in Facebook.
Read on for three more stocks Valiant owned:
Hansen and his team slightly added to their position in Google Inc (NASDAQ:GOOG), closing the year with about 120,000 shares. Last quarter Google Inc (NASDAQ:GOOG)’s revenues were up 36% but net income was only up 7%; this reflects the addition of Motorola Mobility Holdings, which has hurt the company’s margins and caused a hit to earnings. The trailing P/E here is now 24. Billionaire and Tiger Cub Stephen Mandel’s Lone Pine Capital- Hansen himself previously worked for Tiger Cub John Griffin- most recently reported owning over 1 million shares of Google Inc (NASDAQ:GOOG) (check out Mandel’s stock picks).
Valiant owned 1.4 million shares of Liberty Global Inc. (NASDAQ:LBTYA), the $19 billion market cap Internet, TV, and phone company. This is about even with its position from three months earlier. Coatue Management, which is run by Philippe Laffont, added shares to its own position in Liberty Global during Q3 (find Laffont’s favorite stocks). Liberty Global’s stock price is up 47% in the last year, a rise which has resulted in some high earnings multiples.
Investment brokerage Charles Schwab Corp (NYSE:SCHW) rounded out the fund’s top five picks as Valiant increased its holdings from 4.1 million shares to almost 5 million. Glenn Greenberg’s Brave Warrior Capital initiated a position in Charles Schwab between July and September (research more stocks Brave Warrior was buying). In the fourth quarter of 2012, earnings were up 29% versus a year earlier on a 9% revenue increase and higher margins. The stock trades at trailing and forward P/E multiples of 24 and 19, respectively, suggesting that the market is pricing in similar growth rates on the bottom line going forward. It might be better to wait and see if the company continues its strong performance.
Disclosure: I own no shares of any stocks mentioned in this article.
