Hedge fund legend Julian Robertson has filed his 13F with the SEC for the reporting period ending of March 31. Robertson is one of the most famous American hedge fund managers and the founder of Tiger Management, which was among the most successful hedge funds established in the U.S. During the hedge fund’s peak around 1998, it held assets worth $22 billion, but some bad investment decisions led Robertson to close Tiger Management to outside investors in March 2000, though it continued to operate as a family office. Robertson was famous for his mentorship and his many proteges went on to create numerous successful hedge funds of their own after Tiger Management. They are known as “Tiger Cubs” and they consist of some of the best investment managers today including Lee Ainslie, head of Maverick Capital, and Andreas Halvorsen, co-founder of Viking Global Investors. Getting back to Robertson, Alibaba Group Holding Ltd (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), and Delta Air Lines, Inc. (NYSE:DAL) are among the top stock investments of the legendary investor, which we’ll study in this article.
Alibaba Group Holding Ltd (NYSE:BABA) is the top long position of Tiger Management, accounting for 8.88% of the portfolio value of the fund manager. Robertson holds 636,878 shares of the Chinese e-commerce company, with a market value of $53.01 million. The e-commerce company has signed its first partner, Singapore Post Limited, for its Merchant Delivery Scheme, which is targeted towards creating a better end-user experience for customers on its e-commerce platform. What is even more interesting is that Singapore Post Limited is planning to expand its warehouse network to as many as 12 different countries, which aligns perfectly with the expansion plans of Alibaba Group Holding Ltd (NYSE:BABA). Alibaba owns a 10% stake in Singapore Post Limited and both companies are known to have worked together to develop their plans for global expansion. Ever since its U.S IPO in September 2014, Alibaba Group Holding has found plenty of investors including the likes of Rob Citrone‘s Discovery Capital Management, Viking Global, and Tiger Global Management.
Robertson holds a position in Apple Inc. (NASDAQ:AAPL), which owns one of the most profitable businesses ever, with the iPhone maker forming 6.76% of his equity portfolio. Robertson owns 324,500 shares of Apple with have a market value of $40.38 million as of the reporting period. According to a recent report from FBR Capital, the iPhone maker is heading towards massive growth in China and the sell side research firm is expecting Apple’s China revenue to surpass its U.S revenue in 2017. Apple Inc. (NASDAQ:AAPL) reported 71% growth in its Chinese revenue year-over-year during the second quarter of 2015 and it’s quite likely that the company will enjoy cross-selling revenue streams in China with its powerful ecosystem. Billionaires Carl Icahn, Ken Fisher, and David Einhorn all hold large stakes in Apple.
Delta Air Lines, Inc. (NYSE:DAL) comes at number three in the equity portfolio of the fund manager, who owns 893,175 shares of the airline, with a market value of $40.16 million. In a report published earlier today, Bank of America Merrill Lynch named Delta Air Lines, Inc. (NYSE:DAL) the undisputed leader in the airline industry in terms of capital returns. The American airline announced capital returns of $6 billion last week and Merrill Lynch holds a “Buy” rating for the airline, though the firm’s price target of $47 offers limited upside of just 2%. Delta Air Lines holds a global network of strategic partnerships that allows it to cater to more customers and one of the recent partnerships involves Aeromexico. Both the airlines have filed an application with the Federal Competition Commission and they expect to increase their passenger traffic with this alliance. Delta Air Lines, Inc. (NYSE:DAL) was the top U.S airline in terms of on-time flight operations in the month of April. Lansdowne Partners holds the largest position in Delta Air Lines among the firms we track.
Netflix, Inc. (NASDAQ:NFLX) is another major stock investment of Tiger Management as it holds 71,400 shares of the video streaming service, with a market value of $29.75 million. The shares of Netflix, Inc. (NASDAQ:NFLX) have seen tremendous growth in 2015, having grown by over 80% year-to-date. Netflix is offering services in 50 different countries and is planning to expand its network aggressively. Pivotal Research recently upgraded its price target on Netflix to $850, an upside of over 35%, while Apex Capital expects Netflix, Inc. (NASDAQ:NFLX) to be the next $100 billion internet firm (which would suggest substantially more upside, of about 170%). Some of the biggest shareholders of Netflix include Coatue Management and Carl Icahn‘s Icahn Capital.
Hedge funds and other big money managers like Julian Robertson tend to have the largest amounts of their capital invested in large and mega-cap stocks like Netflix, Inc. (NASDAQ:NFLX) and Apple Inc. (NASDAQ:AAPL) because these companies allow for much greater capital allocation. That’s why if we take a look at the most popular stocks among funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month. On the other hand, their top small-cap picks performed considerably better, outperforming the market by 95 basis points per month. This was confirmed through backtesting and in forward tests of our small-cap strategy since 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of more than 139%, beating the broader market by over 80 percentage points (see the details).
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