Billionaires Julian Robertson and Chase Coleman Like the Same Stocks

Chase Coleman is one of Julian Robertson’s most successful disciples. Soon after Robertson closed Tiger Management for outside investors in 2000, he handed Chase Coleman $25 million in seed capital to launch his Tiger Global Management. Chase Coleman’s firm is seen as one of the best-performing hedge funds recently, returning 45% in 2011, 23% in 2012 and 14% in 2013. Julian Robertson, who is widely recognized as the founder of the “hedge fund” concept, tutored many lads in his style of investing, so it’s not surprising that Chase Coleman and Julian Robertson often share the same visions when it comes to picking stocks to invest in. Specifically, JD.com Inc. (NASDAQ:JD) and Netflix Inc. (NASDAQ:NFLX) represent the top holdings of both investors, so we’ll be discussing these companies in more detail later on in this article.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short positions lost a ton of money during the bull market that started in March 2009. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 66 percentage points (see more details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Let’s start off by looking into China’s largest online direct sales company, JD.com Inc. (NASDAQ:JD), in which Julian Robertson’s Tiger Management reported owning 3.14 million shares in its latest 13F filing, marking an increase of 2.71 million shares during the quarter. In this way, the stock represents Julian Robertson’s most expensive position, valued at $106.94 million as of June 30. Meanwhile, Tiger Global Management added some 49.25 million shares to its stake in JD.com, taking it to 70.16 million shares, worth $2.39 billion, which makes it the fund’s largest position. JD.com’s competitor Alibaba Group Holding Limited (NYSE:BABA) has recently announced a deal with consumer electronics retailer Suning Commerce Group in an effort to support its omnichannel efforts, logistics capabilities and electronics selection, which will eventually toughen the rivalry and competition between the two Chinese e-commerce companies. On August 7, JD.com has released its financial results for the second quarter, posting revenue of RMB45.9 billion ($7.4 billion), up by 61% year-to-date. At the same time, the company’s net loss for the quarter narrowed to RMB510.4 million ($82.3 million) from RMB582.5 million ($91.1 million) reported a year ago. The stock of JD.com, China’s largest online sales company, gained 15% year-to-date despite suffering a serious slump under the devastating weight of the Chinese stock market collapse. Aside from the two funds already mentioned, Lone Pine Capital, founded by another Tiger Cub, Stephen Mandel, also owns a sizeable stake in JD.com Inc. (NASDAQ:JD) of 41.89 million shares.

Moving on to Netflix Inc. (NASDAQ:NFLX), which is another stock held by the two “Tigers”. The company represents Tiger Global Management’s second-largest equity position and is on the third spot in Robertson’s 13F portfolio, as of the end of June. However, Chase Coleman’s fund boosted its stake by 16.91 million shares and disclosed ownership of nearly 18 million shares worth $1.69 billion in its latest 13F filing. On the other hand, Julian Robertson trimmed its stake by 10% on the quarter to 445,900 shares, worth $41.85 million. Both positions take into account the seven-for-one stock split in July.

Netflix’s stock has been riding a continuous uptrend since the start of the year, skyrocketing by over 154% year-to-date (adjusted for the split). Even though the stock has reached another all-time high earlier this month of over $129, analysts suggest the stock can go even higher. Just recently, Raymond James has raised the price target on Netflix to $140 from $120. Netflix has formulated a good business model, has demonstrated the ability to manage its fast-growing business, and has established a lead over current and potential late-coming competitors. So the company’s recent performance does not surprise anyone. Even more to that, the stock split, which reduced Netflix’s share price from $700 to $100, turned out to be well-received by investors. The split eventually made the company more affordable for smaller investors, which in turn attracted more capital. Karthik Sarma’s SRS Investment Management also holds a significant stake in Netflix, which contains 10.22 million shares as of the end of June.

Disclosure: None