Billionaire John Griffin‘s $13.8 billion fund, Blue Ridge Capital, recently filed its 13F form for the first quarter, disclosing its long positions in U.S-traded equities as of the end of the first quarter. The market value of Blue Ridge Capital’s equity portfolio stood at $8.77 billion as of the reporting period, with the technology sector, which is up by 9.77% year-to-date according to Morningstar data, contributing 16% to this value. We decided to dissect the fund’s top tech picks, which were comprised of Sensata Technologies Holding N.V. (NYSE:ST), Priceline Group Inc (NASDAQ:PCLN), Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD), and Alibaba Group Holding Ltd (NYSE:BABA).
Griffin set up his own shop in 1996 after serving at Julian Robertson’s Tiger Management, where he was second in command. Griffin performed particularly well during the trying times from 2007 to 2009. Blue Ridge Capital’s returns for 2007 stood at 65%, a loss of 8% was incurred during the following year, and the fund gained 7.7% in 2009. This amounted to a three-year average return of 17.83% during the period. As part of its investment strategy Blue Ridge focuses more on fundamental research than the macroeconomic conditions as far as stock selection is concerned.
Let us take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. In forward tests since August 2012 through March 2015 this small-cap strategy beat the market by more than 80 percentage points, returning 139% (read the details here). Hence a retail investor needs to isolate himself from the herd and take advantage of the prevalent arbitrage opportunities in the market by concentrating on small-cap stocks.
With 6.59 million shares valued at $378.31 million, Sensata Technologies Holding N.V. (NYSE:ST) was the fund’s largest technology holding and represented 4.31% of its portfolio value. The stake remained unchanged during the first quarter. The $9.42 billion manufacturer of sensors and controls has been in the fund’s portfolio since the first quarter of 2011. So far this year the stock has gained nearly 6%. Although Sensata Technologies Holding N.V. (NYSE:ST)’s EPS of $0.65 was in line with the estimates, its revenues of $750.66 million were $2.22 million short of expectations. Another prominent shareholder of the company is John Shapiro‘s Chieftain Capital, which held 3.21 million shares of Sensata Technologies Holding N.V. (NYSE:ST) valued at $184.44 million at the end of March.
The second-largest tech holding, comprised of 291,000 shares was in Priceline Group Inc (NASDAQ:PCLN), with the position valued at $338.77 million, also unchanged during the quarter. The online travel company is up by a modest 5.14% year-to-date, which is fairly close to the 4.6% average gains of the leisure industry during the same period. The stock slumped nearly 5% this month despite beating revenue and EPS estimates for the first quarter, owing to the soft guidance provided by the company’s management. The first quarter also marked two new launches by Priceline Group Inc (NASDAQ:PCLN) at Booking.com in the form of Booking Now, the mobile phone app, and Booking Suite, which provides the company’s partners with software tools for their property websites. Stephen Mandel‘s Lone Pine Capital is the largest stockholder of Priceline Group Inc (NASDAQ:PCLN) in our database, holding 1.33 million shares of Priceline Group Inc (NASDAQ:PCLN) at the end of the first quarter.
