Billionaire Julian Robertson’s Top Stock Picks and His Noteworthy Recent Bullish Moves

Billionaire Julian Robertson is widely-known for creating and developing a highly-skilled group of hedge fund managers known as Tiger Cubs. Some of the most successful so-called Tiger Cubs include billionaires Andreas Halvorsen of Viking Global, Chase Coleman of Tiger Global Management, Stephen Mandel of Lone Pine Capital, to name just a few. Renowned investor Robertson started his hedge fund Tiger Management in 1980 and managed to turn this firm into the world’s largest hedge fund during his career. However, the billionaire money manager returned outside capital back to investors in 2000 to focus on managing his own fortune. Although Tiger Management is not the hedge fund it used to be several decades ago, it might still pay off to catch a glimpse into Julian Robertson’s stock picks and investment ideas. The widely-known hedge fund vehicle oversees a public equity portfolio with a value of $775.18 million as of the end of the fourth quarter of 2015, as compared to $748.40 million registered at the end of September. It should also be mentioned that Julian Robertson’s 42 long positions in companies with a market capitalization above the $1 billion mark generated a weighted average return of 2.1% in 2015, and clearly his long term bets are worth close attention. Having said that, the following article will discuss some of the most prominent positions of Robertson at the end of 2015 and several noteworthy moves made during the final quarter of the year.

Out of thousands of stocks that are trading on the market every day, it can be difficult sometimes to pick the right investment that can deliver market-beating returns. Here’s where our research comes in. By analyzing the equity portfolios of 700+ top investors, we can see what stocks they are collectively bullish on and use this data to compile a portfolio that can outperform the market. We have determined through this process that the best strategy is to follow the 15 most popular small-cap picks among hedge funds, which have delivered an alpha of around 81 basis points per month in our backtests covering the period between 1999 and 2012 (see more details).

Let’s begin our discussion with Julian Robertson’s largest equity position, represented by Alphabet Inc. (NASDAQ:GOOG). Tiger Management owns 68,865 Class C shares of Alphabet as of the end of the fourth quarter, up 2,260 units quarter-on-quarter. The upped stake was valued at $52.26 million at the end of 2015 and accounted for 6.74% of the fund’s equity portfolio. The shares of the Internet giant have advanced by at least 30% over the past 12 months, and may go even higher according to analysts’ opinions and their price targets. The core business of Alphabet Inc. (NASDAQ:GOOG) involves selling online advertising space and has grown at a steady pace over the years. The company also focuses on a wide portfolio of high-potential projects, some of which Alphabet has been shutting down due to underperformance. For instance, the tech giant recently revealed its plans to shut down the photo storage service called Picasa and focus its attention on the freshly-launched photo sharing service Google Photos. Mason Hawkins’ Southeastern Asset Management reported owning 1.21 million Class C shares of Alphabet Inc. (NASDAQ:GOOG) through its 13F for the December quarter.

Tiger Management lifted its position in Facebook Inc. (NASDAQ:FB) by 19,100 shares during the October-December period, ending the year with 496,000 shares valued at $51.91 million. Facebook has been very successful in monetizing its products in the past several years, with its 2015 revenue reaching $17.93 billion, up from $12.47 billion in 2014 and $7.87 billion in 2013. This exceptional performance can be attributed to the company’s success in capitalizing on the shift to mobile, growing the number of marketers using its ad products, and making ads more relevant and effective. For instance, mobile advertising revenue accounted for 77% of total advertising revenue in 2015, as compared to 65% in 2014. Of course, marketers keep channeling more capital towards digital platforms at the expense of traditional media, but many advertisers continue to be skeptical about the effectiveness of online ads. Therefore, Facebook Inc. (NASDAQ:FB)’s ability to persuade advertisers that its ad products are efficient will be key for its future financial success. Meanwhile, Facebook shares are up 32% over the past one-year period. Tiger Cub Stephen Mandel cut his stake in Facebook Inc. (NASDAQ:FB) by nearly 917,000 shares during the December quarter to 9.79 million shares.

Let’s take a look at Julian Robertson’s third-largest equity holding, represented by Delta Air Lines Inc. (NYSE:DAL). The renowned investor upped his position in the air carrier by 11,700 shares during the final quarter of 2015 to 1.01 million shares worth $51.30 million. Delta Air Lines has been very successful in strengthening its balance sheet in recent years, which will enable it to easily navigate any potential industry downturns. The company reduced the amount of debt and capital leases by $9.8 billion since the end of 2009 through the end of 2015. The amount of debt and capital leases dropped to $8.5 billion at the end of 2015 from the $13.2 billion registered at the beginning of 2013. As a result, Moody’s Investors Service recently upgraded Delta’s debt rating to an investment grade level, which will most likely result in lower cost of borrowing and lower interest expenses. Meanwhile, the stock is flat over the past 12 months, after having lost 9% thus far in 2016. Lansdowne Partners, managed by Alex Snow, owns 26.06 million shares of Delta Air Lines Inc. (NYSE:DAL) as of December 31.

Tiger Management added a 595,300-share position in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) to its portfolio during the December quarter, which was valued at $39.08 million. The new position amassed 5.04% of the fund’s equity portfolio. The shares of the global pharmaceutical company have slid by more than 12% since the beginning of the year and are trading at a cheap forward P/E multiple of 9.25, which is substantially below the average of 15.1 for the Pharmaceuticals industry. In July 2015, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) announced an agreement to purchase Allergan’s generics drug business Actavis Generics for $33.75 billion in cash and roughly 100 million Teva shares. The cash-and-stock deal, which is not yet completed due to regulatory approvals, will make the Israel-based Teva the largest maker of generic medicines in the world. It was previously anticipated that the deal would close by the end of the first quarter of 2016, but the closing might be delayed. Andreas Halvorsen of Viking Global boosted his stake in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) by 16.17 million shares during the final three months of 2015 to 25.04 million units.

Last but not least, billionaire Julian Robertson increased his holding in GrubHub Inc. (NYSE:GRUB) by 695,528 shares or 82% during the December quarter to 1.54 million shares, which were valued at $37.19 million at the end of 2015. The provider of a platform for restaurant pick-up and delivery orders has seen its shares decline by 43% over the past year, presumably because of toughening competition in the industry. For instance, analysts believe that e-commerce giant Amazon.com Inc. (NASDAQ:AMZN) represents a major threat for the food-delivery firm, as Amazon continues to expand the reach of its restaurant delivery service. However, GrubHub Inc. (NYSE:GRUB) had a great 2015 in terms of financial performance, with its full-year 2015 revenues increasing 43% year-on-year to $361.8 million. Its net income totaled $38.1 million or $0.44 per diluted share in 2015, up 57% year-on-year. Christian Leone’s Luxor Capital Group appears to have noticed the toughening competition and trimmed its stake in GrubHub Inc. (NYSE:GRUB) by 3.48 million shares during the last quarter of 2015 to 4.96 million shares.

Disclosure: None