Billionaire Chase Coleman’s Top Long-Term Picks

Billionaire Chase Coleman is one of the blue-eyed boys of the hedge fund industry. Having started his career under the mentorship of the hedge fund legend Julian Robertson in 1997, Mr. Coleman started out on his own by founding Tiger Global Management LLC with $25 million in seed money from Mr. Robertson in 2001, at a young age of 26. In the past 15 years, Tiger Global Management LLC has grown by leaps and bounds and has had several years when it outperformed its peers by a wide margin. Over the years, Tiger Global Management LLC has also made its name in the private equity space by backing several companies which have turned out to be ‘unicorns’. Considering Mr. Coleman’s and Tiger Global’s expertise in identifying the best investment opportunities before the rest of the market, we thought of making a list of the stocks that has been part of the Tiger Global’s portfolio for quite some time. In this post, we will be concentrating on the five major long-term holdings of Tiger Global Management.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

#5 Mastercard Inc (NYSE:MA)

– Shares Owned by Tiger Global Management LLC (as of December 31): 2.37 million

– Value of Holding (as of December 31): $230.40 million

At the end of 2015, Tiger Global Management LLC owned a stake in Mastercard Inc (NYSE:MA) for eight years running, having first initiated it in the fourth quarter of 2007. Though the fund reduced its stake in the payment processing giant by 5% during the fourth quarter, Mastercard Inc (NYSE:MA) still represented its 12th largest holding at the end of December. Another notable investor that trimmed its exposure to the company during that period was billionaire Stephen Mandel‘s Lone Pine Capital; it brought its holding down by 27% to 6.15 million shares. Mastercard’s stock reached its lifetime high of $101.76 last November and then declined swiftly by almost 20% in the next three months. However, it has recovered since then and now trades down by 7% year-to-date. On February 11, analysts at Bank of America downgraded the stock to ‘Neutral’ from a ‘Buy’ and also lowered their price target on the stock to $92 from $105, which is almost the level at which the stock currently trades at.

#4 Restoration Hardware Holdings Inc (NYSE:RH)

– Shares Owned by Tiger Global Management LLC (as of December 31): 3.19 million

– Value of Holding (as of December 31): $253.72 million

Tiger Global Management LLC first initiated a stake in Restoration Hardware Holdings Inc (NYSE:RH) during the fourth quarter of 2013 and in the next two quarters increased it to 3.19 million shares, which it kept holding going into 2016. At the end of December, it was the largest shareholder of the company, among funds tracked by us, followed by billionaire Ken Griffin‘s Citadel Investment Group, which owned 1.46 million shares. Shares of Restoration Hardware Holdings Inc (NYSE:RH) have declined by over 60% in the past five months and are currently trading down over 50% year-to-date. A large part of the losses that its shares have seen this year came after the company reported dismal preliminary fourth-quarter results on February 24. Analysts also failed to buy the excuses that the company’s management gave for such a severe shortfall in the quarterly numbers. Restoration Hardware Holdings is expected to report its  actual fourth quarter numbers this Tuesday and the consensus among analysts includes EPS of $0.17 on revenue of $461.55 million. For the same quarter of the previous year, the company reported EPS of $1.02 on revenue of $582.70 million.

#3 TransDigm Group Incorporated (NYSE:TDG)

– Shares Owned by Tiger Global Management LLC (as of December 31): 1.22 million

– Value of Holding (as of December 31): $278.77 million

TransDigm Group Incorporated (NYSE:TDG) has been one of the best performing long-term picks of Tiger Global Management LLC since it initiated a position during the second quarter of 2013. Though Tiger Global Management LLC  didn’t make any changes to its stake in TransDigm Group Incorporated (NYSE:TDG) during the fourth quarter, it did book some profit by selling 53% and 3% of its stake in the company during the second and third quarters of 2015, respectively. Shares of TransDigm Group Incorporated (NYSE:TDG) fell off a cliff this year in February after the company reported its fourth-quarter results. However, they have bounced back since then and now trade down by only 3.6% year-to-date. After the company’s recent disastrous quarterly performance, some analysts who track the stock are skeptical about its prospects going forward. Their concerns also stem from the company’s recent acquisition of Breeze-Eastern Corporation, which they think won’t add as much value as TransDigm Group Incorporated expects. Alexander Captain’s Cat Rock Capital initiated a stake in TransDigm Group Incorporated during the fourth quarter by purchasing 307,360 shares.

#2 FleetCor Technologies, Inc. (NYSE:FLT)

– Shares Owned by Tiger Global Management LLC (as of December 31): 4.57 million

– Value of Holding (as of December 31): $653.20 million

FleetCor Technologies, Inc. (NYSE:FLT) has been a part of Tiger Global Management LLC’s 13F portfolio since the final quarter of 2012. Though the stock of FleetCor Technologies, Inc. (NYSE:FLT) has appreciated by a whopping 165% since then, Tiger Global Management LLC has never cut the position since initiating its stake and only increased it. Billionaire John Griffin‘s Blue Ridge Capital is another major shareholder of the company, it owns almost 2 million shares of FleetCor Technologies, as of December 31. Shares of FleetCor Technologies have appreciated significantly from the 52-week low of $107.56 they reached in February and are currently trading up by 2% year-to-date. On March 15, the company announced that it has agreed to acquire Brazilian electronic toll payment company STP for $1.05 billion. For its fiscal 2016 first quarter, analysts project FleetCor Technologies to report EPS of $1.49 on revenue of 415.64 million, compared to EPS of $1.45 on revenue of $416.20 million it delivered for the same quarter of the previous year.

#1 Vipshop Holdings Ltd – ADR (NYSE:VIPS)

– Shares Owned by Tiger Global Management LLC (as of December 31): 49.50 million

– Value of Holding (as of December 31): $755.86 million

Despite Vipshop Holdings Ltd – ADR (NYSE:VIPS) losing almost 50% of its market capitalization between April and December 2015, Tiger Global Management didn’t lose its faith in the company. Instead, it used the slump to boost its position by 184% during the October-December period. The fund initiated its stake in the Chinese e-commerce player during the last quarter of 2013. Interestingly, another Tiger Cub, Ted Kang of Kylin Management, which also initiated a stake in Vipshop Holdings Ltd – ADR (NYSE:VIPS) during the fourth quarter of 2013, also increased his fund’s stake in the company by 7% to almost 19 million shares during the fourth quarter of 2015. Vipshop Holdings’ stock has continued its downward journey this year too, losing 17.18% year-to-date. On February 25, the company reported EPS of $0.18 on revenue of $2.13 billion for its fiscal 2016 fourth quarter, beating analysts’ expectations of EPS of $0.16 on revenue $1.89 billion. Most analysts who cover the stock are currently bullish on it, citing the company’s strong mobile growth and its repeat customer base. The stock currently sports an average rating of ‘Overweight’ and an average price target of $16.51 from the 22 prominent analysts and research houses that cover it.

Disclosure: None