John Thaler’s JAT Capital Management received goods news today, as one of its top picks from the last quarter began to show strong positive signs. Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) was up by more than 22% in Friday intraday trading, after releasing its fourth quarter and full year financial results yesterday afternoon. The stock soared in after-hours trading on Thursday, thanks to the better-than-expected results reported by the company, and is currently trading at $56.38 per share. Hence, JAT Capital’s stake in Ctrip.com International, which amounts to 5.84 million shares, is already panning out to be a great investment.
JAT Capital Management is a long/short equity hedge fund that was launched in 2007 by John Thaler and is currently headquartered in Greenwich, Connecticut. The fund’s founder and current manager has an economics graduate from University of Chicago, who gained extensive experience in the private equity markets by working at numerous firms, including Merrill Lynch, Spectrum Equity Investors, and Shumway Capital Partners. Last quarter, JAT Capital disclosed an equity portfolio valued at $2.06 billion, consisting primarily of companies from the information technology and consumer discretionary sectors. In addition to its large holding in Ctrip.com International, the fund boasts Yahoo! Inc. (NASDAQ:YHOO) and The Madison Square Garden Co (NASDAQ:MSG) as its top picks for the fourth quarter.
Last quarter, JAT Capital increased its holding in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) by 40% with the purchase of 1.68 million shares. According to the 13F filing, the fund’s stake in the company was valued at $265.80 million at the end of 2014, representing 10.19% of its equity portfolio, and thus ranking as its third-largest holding. Michael Pollack’s Destrier Capital is also betting on the China-based hotel and accommodation booking provider, holding 810,600 shares as of last quarter. Although the stock’s share price dropped 13.42% throughout 2014, recent events suggest JAT Capital’s bullish sentiment was not mistaken. Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) registered $308 million in revenue this quarter, representing a 33% year-over-year increase, and beating its own estimate of 30% for the fourth quarter. Furthermore, the company reported a loss of $0.26 per share, thus exceeding the expectation of Wall Street analysts, which expected a loss of $0.28 per share. Bullish investors greeted these results with enthusiasm, as Ctrip.com International expects to remain on this positive trajectory, and anticipates year-over-year revenue growth of 40-50% for the upcoming quarter.
Yahoo! Inc. (NASDAQ:YHOO) was also among JAT Capital’s top picks last quarter, with a stake of 6.83 million shares, valued at $345.10 million. Despite reducing its exposure to the stock by 2.02 million shares by the end of 2014, Mr. Thaler’s firm is still betting big on the company. During the last two quarter, Yahoo! Inc. (NASDAQ:YHOO) has been gaining traction among hedge funds, especially due to its large investment in Alibaba Group Holding Ltd (NYSE:BABA), which went public in September. Christian Leone’s Luxor Capital Group for example entered a new position in the company with the purchase of 9.22 million shares, valued at $465.60 million, and representing 9.38% of its equity portfolio. Daniel S. Och’s OZ Management was also bullish on this stock, acquiring a new holding of 8.99 million shares last quarter.
Although The Madison Square Garden Co (NASDAQ:MSG) ranked as its top pick last quarter, JAT Capital reduced its stake in the company from 5.96 million shares, to 2.81 million shares at the beginning of the year. Mr. Thaler’s firm entered a position in the company at the end of 2012, when it acquired 733,700 shares, and had been increasing its exposure to the stock gradually over the years. Furthermore, the hedge fund went activist on The Madison Square Garden Co (NASDAQ:MSG) last year, claiming it intended to engage in constructive conversations with its board of directors, in order to augment shareholder value. Kenneth Mario Garschina’s Mason Capital Management also holds a considerable stake in the company, amounting to 4.38 million shares, which were valued at $329.98 million at the end of 2014.
Tracking the activity of hedge funds, such as JAT Capital, is a great way to identify profitable investment opportunities that will help you beat the market. Their small-cap picks are particularly attractive, since large-cap stocks tend to be more efficiently priced, meaning potential returns are far lower. Here at Insider Monkey, we gather information regarding stock picks made by hedge funds and analyze their equity portfolios, seeking out the best investment opportunities. Through this method, our small-cap strategy was able to outperform the market by more than 75 percentage points over the last 2.5 years ago.
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