Apple Inc. (AAPL) And The Rest Of Billionaire Julian Robertson’s Long Term Picks

Julian Robertson has become a legendary investor both because of his success as a hedge fund manager at Tiger Management- which made him a billionaire- and his ability to groom “Tiger Cubs” who have gone on to become successful managers themselves. We track 13F filings from Robertson and other notable investors, including hedge funds, as part of our work researching investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year. Our database also allows us to track individual managers’ holdings over time to see what they have consistently liked for the past couple of years. Read on for our quick take on five stocks which Robertson owning in his most recent 13F filing and also in his filing for the end of December 2010 (or see the full list of Robertson’s stock picks):

One of Robertson’s largest holdings by market value at the beginning of this year was Mastercard Inc (NYSE:MA), disclosing ownership of about 50,000 shares. The credit card company is priced fairly highly in the market, at a valuation of 25 times its trailing earnings. Revenue grew 10% last quarter compared to the first quarter of 2012, and while that growth rate would be impressive if the stock is cheaper we aren’t sure it’s enough to justify the current valuation. Tiger Global Management was one major shareholder in Mastercard Inc (NYSE:MA) at the end of the fourth quarter of 2012 (find Tiger Global’s favorite stocks).

Robertson has owned Apple Inc. (NASDAQ:AAPL) for the last couple of years, though he has been adjusting his position considerably over time and cut his stake by 58% in Q4. Apple Inc. (NASDAQ:AAPL) lost its place as the most popular stock among hedge funds in the last three months of 2012, with AIG being the new #1 (here is the rest of hedge funds’ top five). Falling gross margins have caused Apple Inc. (NASDAQ:AAPL)’s earnings to decline despite higher revenues. Currently the stock trades at 11 times trailing earnings, a level at which we’d expect to see steady to low earnings growth over time (though a sizable cash hoard is responsible for much of Apple Inc. (NASDAQ:AAPL)’s market cap).

Google Inc (NASDAQ:GOOG) is another of Robertson’s long-term stock picks with the most recent filing reporting a position of about 30,000 shares. Google Inc (NASDAQ:GOOG) has been growing its net income, both through its core Google Inc (NASDAQ:GOOG) business and by better integrating its acquisition of Motorola Mobility Holdings. However, markets are expecting continued improvement on both fronts judging by the trailing earnings multiple of 25. The stock had also been one of the top picks among hedge funds; billionaire and Tiger Cub Stephen Mandel’s Lone Pine Capital had 1.6 million shares in its portfolio per that fund’s own filing (check out more stocks Lone Pine owns).

Robertson owned almost 320,000 shares of QUALCOMM, Inc. (NASDAQ:QCOM) at the beginning of January. QUALCOMM, Inc. (NASDAQ:QCOM) is another growth stock: earnings have not been great, but revenue was up over 20% in the first quarter of 2013 versus a year earlier. Some growth is included in the current stock price, with trailing and forward earnings multiples of 18 and 13 respectively, but we’d be interested in seeing if future growth can be high enough to make the stock a buy. Viking Global- which is managed by Andreas Halvorsen, another billionaire Tiger Cub- increased the size of its position in QUALCOMM, Inc. (NASDAQ:QCOM) by 12% to over 11 million shares (see more stocks Halvorsen was buying).

The 13Fs also show a long-term interest in Visa Inc (NYSE:V). Like Mastercard, the market is excited about Visa Inc (NYSE:V); in fact, the stock trades at 21 times consensus earnings for the fiscal year ending in September 2014. We’d be a bit concerned, however, about the intersection between that premium pricing and the fact that earnings were actually down in its most recent quarter compared to the same period in the previous fiscal year. As with Mastercard Inc (NYSE:MA) it might be best to avoid the stock. Visa Inc (NYSE:V) was one of the largest holdings in billionaire Ken Fisher’s Fisher Asset Management’s portfolio (research more stocks Fisher owned).

Disclosure: I own no shares of any stocks mentioned in this article.