Billionaire Chase Coleman’s Top Five Mega-Cap Picks

Chase Coleman, the founder of Tiger Global Management, is one of the so-called “Tiger Cubs” who began his career at Julian Robertson’s Tiger Management before starting out on his own in 2000. Coleman was an early investor in some of the biggest technology companies today. At Insider Monkey, we backtested a portfolio of five of his largest positions in mega-cap stocks (with a market cap of at least $50 billion) and calculated the returns from them. These stocks returned 0.89% on an average each month from 2002-2012. During the same period S&P 500 Index returned just 0.44%. His mega cap stock picks outperformed the market by 45 basis points per month, or 5.4% per year. Having said that, in this article, we’ll analyse some of Chase Coleman’s top mega-cap picks.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs (see more details).

Priceline Group Inc. (NASDAQ:PCLN) was the top holding of Tiger Global Management at the end of the third quarter. The fund bought an additional 170,669 shares taking its total investment in the stock to 920,669 shares worth $1.35 billion. Priceline is the world’s biggest online travel company (OTA) and its stock has performed strongly over the last few years. Among other hedge funds that we track, Barry Rosenstein‘s JANA Partners initiated a new position buying 105,409 shares while Two Sigma Investments held 88,419 shares of Priceline Group Inc (NASDAQ:PCLN) at the end of September. The stock has returned 21% year-to-date and is currently trading very close to its 52-week high of $1,600. For its latest quarter, the company reported good results with earnings of $31.18 per share beating estimates by $1.86. The number of funds from our database owning shares of Priceline Group Inc. (NASDAQ:PCLN) went up to 98 from 85 during the third quarter, while the total value of their holdings advanced to $8.18 billion from $7.24 billion.

Despite paring its take in Amazon.com, Inc. (NASDAQ:AMZN), the company represented the second largest holding of Tiger Global Management at the end of the September quarter. The fund sold 121,579 shares of this e-commerce retailer, but still held 1.34 million shares worth more than $1.12 billion. Some of the other hedge funds long Amazon.com, Inc. (NASDAQ:AMZN) included D. E. Shaw and billionaire Andreas Halvorsen’s Viking Global Investors. With a market capitalization value of $364 billion, the stock is now trading at 177 times its trailing P/E and has returned 21% in the last one year. The company continues to invest heavily in growth and has been extremely successful in its cloud computing venture. Amazon.com, Inc. (NASDAQ:AMZN) was included in 13F portfolios of 150 funds that we track at Insider Monkey at the end of the third quarter, up from 145 at the end of June.

Alibaba Group Holding Ltd (NYSE:BABA) was the fifth largest holding of Chase Coleman’s Tiger Global Management at the end of the third quarter. The fund initiated a new position in this stock by buying more than 5.3 million shares valued at $568 million according to its last 13F filing. During the third quarter, Stephen Mandel’s Lone Pine Capital also initiated a new position in Alibaba Group Holding Ltd (NYSE:BABA) by purchasing more than 5.0 million shares. The company led by Jack Ma is by far the largest online retailer in China having a huge number of internet users. Besides retail, this group has also diversified into gaming, digital payments and financial services. Shares of this Chinese online company have cheered investors by returning more than 17% in the last one year, and have a mean ‘Buy’ rating among analysts covering the stock.  The hedge fund interest in Alibaba Group Holding Ltd (NYSE:BABA) shot up during the third quarter with the number of funds tracked by us long the stock jumping by 35 to 104 funds that amassed $8.26 billion worth of stock in aggregate at the end of September.

Apple Inc. (NASDAQ:AAPL) has been a hot favorite among hedge funds this year. The stock was also the seventh largest holding of Tiger Global Management at the end of the third quarter, constituting 5.87% of the latter’s portfolio. The fund bought an additional 2.22 million shares taking its total position to 3.6 million shares worth more than $407 million in Apple Inc. (NASDAQ: AAPL). The company has a market capitalization value of $611 billion and reported a net profit of $9 billion on revenues of $46.90 billion for its fiscal fourth quarter ended September 24. Its quarterly earnings topped analysts’ estimates while sales came in roughly in line with expectations. Apple Inc. (NASDAQ: AAPL) is looking at new sources of growth as it its smartphone products are reaching saturation in terms of market share growth. The company’s new forays into wearables have not been as successful as its product innovations in the past. According to our records, 145 funds held shares of Apple worth $16.22 billion at the end of the third quarter, compared to 116 funds holding $10.67 billion worth of stock at the end of the second quarter.

Alphabet Inc (NASDAQ:GOOG) was a new addition to Tiger Global’s portfolio during the third quarter. The fund bought 283,877 class C shares of Alphabet Inc. (NASDAQ:GOOG) worth $220 million at the end of September. The company posted better-than-expected top- and bottom-line results for the  third quarter, with EPS of $9.06 versus estimates of $8.63 and revenues of $22.45 billion compared to expectations of $22.05 billion. Analysts are overwhelmingly bullish on the stock with 35 out of the 41 analysts covering the stock rating it as a ‘Buy’. The company is becoming aggressive in the smartphone hardware market by heavily marketing its new “Pixel” smartphone. The number of hedge funds from our database long Alphabet Inc. (NASDAQ:GOOG)’s class C stock increased by eight to 134 and the total value of their holdings surged by 18.6% to $14.22 billion during the third quarter.

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