The veteran investor Julian Robertson (pictured) has dozens of cubs, a name given to former Tiger Management employees who went on to set their own shop with seed money from Robertson. Tiger cubs and grandcubs are currently dominating the hedge fund industry even though some of them recently decided to shut down their funds. We are wondering among a few dozen Tiger cubs and grandcubs which fund is Julian Robertson’s favorite one. We used numbers to answer this question. Our data shows that Julian Robertson’s 13F portfolio is most similar to the 13F portfolio of Coatue Management, a tech-focused fund founded by Philippe Laffont. Robertson and Laffont had 12 stocks in common and 25% of their stock picks matched in terms of portfolio weight. The 4 stocks worth mentioning are Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), Facebook Inc (NASDAQ:FB), and Alibaba Group Holding Ltd (NYSE:BABA).
Even at the age of 83 Robertson is playing the market like a fiddle. While the markets around the world are worried about a Greek default and now even the U.S. commonwealth Puerto Rico, which might soon be joining the group of countries that can’t pay their debt, Robertson is calmly cashing in on both counts. He was short on Assured Guaranty Ltd. (NYSE:AGO), when the stock fell more than 14% on news of a possible Puerto Rico default owing to the bond insurer’s exposure to the country. Moreover, Robertson has also been short on euro for a long time and the emerging Greek drama is only helping his cause. The currency has fallen by about 18% over the past year. At the end of March the market value of Tiger Management’s public equity portfolio stood at $596.87 million while that of Coatue’s portfolio amounted to $10.53 billion.
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Hedge funds and other big money managers like Robertson tend to have the largest amounts of their capital invested in large and mega-cap stocks like 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, showing that their most popular picks and the ones that received the bulk of their capital were not actually their best picks. Don’t get us wrong. Their large cap stock picks are less riskier than the market and managed to generate a small alpha (after adjusting for risk they outperformed the market by a small margin). 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 August 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of more than 135%, beating the broader market by over 80 percentage points through the end of June (see the details).
Coming back to the equity holdings that both Robertson and Laffont are in agreement with, Apple Inc. (NASDAQ:AAPL) tops the list. The $717 billion tech giant is Coatue’s top equity holding with 7.69 million shares valued at $956.57 million. The holding represents 9.09% of the fund’s portfolio value. Tiger’s holding in Apple Inc. (NASDAQ:AAPL) amasses 6.77% of the fund’s portfolio and comprises of 324,500 shares valued at $40.38 million. The maker of iPhones if the second most popular company among the hedge funds that we track. A total of 150 firms held it in their portfolios at the end of March as compared to 149 at the end of the previous quarter. Activist investor Carl Icahn‘s Icahn Capital Lp is the largest stockholder among these owning some 52.76 million shares valued at $6.57 billion.
