Robert Karr’s Bet on Qunar Cayman Islands Ltd (QUNR) Bears Fruit

Qunar Cayman Islands Ltd (NASDAQ:QUNR) is a search-based commerce platform for the travel industry in China. Karr initiated a stake in the company during the third quarter of 2014 by purchasing some 1.01 million shares. This was followed by a 49% increase in the holding during the last three months of 2014. The main drivers of the above mentioned fourth quarter financial results were the $41.5 million mobile revenues, which increased by 400.7% on a year over basis and $55.5 million in flight revenue which registered a 116% increase during the same period. While these indicators post quite a rosy picture, there are issues to be worried about as well. Qunar Cayman Islands Ltd (NASDAQ:QUNR) did lose a significant amount of money last quarter as cash on its balance sheet dwindled to $131 million and working capital turned negative.

Robert Karr founded Joho Capital in 1996 after working as a managing director for Julian Robertson’s Tiger Management. In light of this and also because of Robertson’s stake and help in setting up the fund, Karr is known as one of Robertson’s “Tiger Cubs”. The firm also has offices in Tokyo and Taipei, which help Karr to capitalise from his extensive experience in Asian equities. This is also exhibited by the fact that most of the fund’s top holdings are companies that are headquarted and operate in Asia. Joho Capital’s portfolio value stood at $521 million towards the end of 2014, with holdings in technology stocks constituting 63% of the portfolio value. The fund’s top three holdings included Baidu Inc (ADR) (NASDAQ:BIDU), Google Inc (NASDAQ:GOOG), and TAL Education Group (ADR) (NYSE:XRS). Joho’s portfolio lacks diversity as top ten holdings account for 97.63% of the portfolio value. Joho also has a low turnover ratio of 15.38%.

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With 546,600 shares valued at $124.60 million, Baidu Inc (ADR) (NASDAQ:BIDU) was Kerr’s largest holding. Among over 700 hedge funds that we track, Stephen Mandel’s Lone Pine Capital had the largest holding in the Chinese-language Internet search provider amounting to 7.03 million shares valued at $1.6 billion. The stock is up nearly 25% over the last year. Baidu Inc (ADR) (NASDAQ:BIDU) is also one of the companies that billionaires have been piling their investments into during the fourth quarter.

Google Inc (NASDAQ:GOOG)‘s stake comprised of 150,700  shares valued at $79.31 million. As the search giant fell some 8.3% over the last year, the hedge funds invested in the company also fell to 120 with $6.11 billion in total investments during the fourth quarter from 137 funds with $7.46 billion a quarter earlier. However, the stock was still among the top 10 technology picks among hedge funds at the end of 2014. Boykin Curry’s Eagle Capital Management holds about 1.12 million shares valued at $587.24 million.

Even though Google Inc (NASDAQ:GOOG) is the most dominant player in mobile ads, the company’s key metrics like top and bottom lines, and CPC (Cost per Click) have been declining over several quarters. As for its fourth quarter financial results Google Inc (NASDAQ:GOOG) posted an EPS of $6.88 which missed the estimates by $0.2 and $14.5 billion revenues also came in $110 million lighter than anticipated.

TAL Education Group (ADR) (NYSE:XRS) constituted 13.19% of Joho’s portfolio value with 2.45 million shares valued at $68.74 million. The company engaged in provision of after-school tutoring programs for primary and secondary school students in China is another one of Kerr’s successful investments, since the stock is up by nearly 33% over the last 52 weeks. Christopher Lyle is another investor in TAL Education Group (ADR) (NYSE:XRS). He held 600,000 shares valued at $16.85 million.

Disclosure: none