Tiger Cub Robert Citrone Reveals Major Moves in Alibaba, Amazon and Others

Billionaire Robert Citrone, a so-called Tiger Cub due to his previous position at the Julian Robertson’s Tiger Management, founded Discovery Capital Management LLC in 1999. Connecticut-based Discovery hasn’t performed quite well in the past two years or so, as the firm lost money for two consecutive years. Mr. Citrone’s biggest hedge fund, called Discovery Global Opportunity, was down 0.6% in 2015, while the smaller Discovery Global Macro fund was down 5.8%. However, the former high-school wrestler, who initially attracted capital from legendary investors George Soros and Mr. Robertson, had generated an annualized return of roughly 17% since his firm’s inception through mid-2013. As Mr. Citrone rarely gives interviews or speaks at investment conferences, retail investors can get a glimpse into his mind and investment strategy by closely examining the 13F filings submitted by his firm. That said, the following article will disclose Mr. Citrone’s major moves implemented during the first quarter of this year.

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Billionaire Rob Citrone Cuts Alibaba Group Holding Ltd (NYSE:BABA) Stake by 43% during Q1

– Number of shares owned by Discovery as of March 31: 6.00 Million

– Value of Discovery’s holding as of March 31: $474.34 Million

In the first quarter of 2016, Discovery Capital Management, LLC trimmed its stake in Alibaba Group Holding Ltd (NYSE:BABA) by 4.60 million American Depositary Shares (ADSs) or approximately 43% to 6.00 million ADSs. The trimmed stake was valued at $474.34 million at the end of March and accounted for 6.9% of the fund’s entire portfolio. Just recently, the International Anti-Counterfeiting Coalition suspended the membership of the Chinese e-commerce juggernaut, after receiving strong criticism from various companies that suggested Alibaba was the largest marketplace for fakes in the world. Some of the Coalition’s brands, including Gucci America and Michael Kors, quit the group after the e-commerce giant gained acceptance into the highly-respected Coalition earlier this year. Michael Kors named Alibaba as their “most dangerous and damaging adversary”, but the Chinese giant recently said it plans on tackling and solving counterfeiting issues. Alibaba ADSs have gained 20% in the past three months, but are still down 2% year-to-date. Boykin Curry’s Eagle Capital Management owns 3.73 million ADSs of Alibaba Group Holding Ltd (NYSE:BABA) as the end of the March quarter.

Mr. Citrone Boosted Stake in Amazon.com Inc. (NASDAQ:AMZN) during Q1

– Number of shares owned by Discovery as of March 31: 558,028

– Value of Discovery’s holding as of March 31: $341.36 Million

Robert Citrone’s Discovery upped its Amazon.com Inc. (NASDAQ:AMZN) stake by 339,533 shares during the first three months of 2016, which marked a massive increase of 155% quarter-on-quarter. The 558,028-share stake was worth $341.36 million on March 31, making up 4.9% of the fund’s entire portfolio. Amazon is expanding its restaurant delivery business to include the largest city in the U.S., New York City. All members of Amazon’s Prime Now subscription program, who pay a $99 fee for the annual Prime membership, will be able to order meals from more than 350 Manhattan restaurants. However, Manhattan is an extremely competitive market for all players in the restaurant delivery business, with Postmates, DoorDash and GrubHub being among the main players in the region that enable customers to place restaurant orders through their apps. Amazon shares are up 4% since the start of 2016 after advancing an impressive 34% in the past three months. Andreas Halvorsen’s Viking Global reported owning 3.44 million shares of Amazon.com Inc. (NASDAQ:AMZN) in its 13F filing for the first quarter.

Discovery Increases Exposure to Broadcom Ltd (NASDAQ:AVGO) by 165%

– Number of shares owned by Discovery as of March 31: 1.79 Million

– Value of Discovery’s holding as of March 31: $276.69 Million

The Connecticut-based hedge fund owns 1.79 million shares of Broadcom Ltd (NASDAQ:AVGO) as of March 31, up 1.12 million shares relative to the stake recorded at the end of December. The pool of 1.79 million shares owned by Discovery was worth $276.69 million at the end of March and constituted 4.0% of the fund’s portfolio. Broadcom, the successor of the $37 billion Broadcom-Avago Technologies merger, represents a long-time supplier of communication chips to Apple Inc. (NASDAQ:AAPL). Just recently, analysts at Nomura slashed the price target on Broadcom to $190 from $200 and reiterated their ‘Buy’ rating, citing weak demand for iPhones. Nomura said that iPhone 6s inventories are declining slower-than-anticipated, so the firm cut Broadcom’s fiscal 2016 earnings estimates to $9.09 per share from $9.49 a share. The shares of Broadcom are down 2% since the beginning of 2016 despite having gained 11% in the past three months. Dan Loeb’s Third Point LLC disclosed an ownership of 1.30 million shares of Broadcom Ltd (NASDAQ:AVGO) in its latest 13F.

Robert Citrone Adds Facebook Inc. (NASDAQ:FB) to His Pool of High-Potential Stock Picks

– Number of shares owned by Discovery as of March 31: 1.72 Million

– Value of Discovery’s holding as of March 31: $195.72 Million

Robert Citrone and his team added a 1.72 million-share stake in Facebook Inc. (NASDAQ:FB) to Discovery’s portfolio during the January-to-March period, which was valued at $195.72 million on March 31. Most investors and analysts focus on Facebook’s core platform and the news feed when estimating the future potential of the company, but some may have overlooked Facebook’s long-term monetization potential of Messenger and WhatsApp. Most brands and retailers are channeling more capital into digital ads, with a high portion of that advertisement spending flowing to giant tech companies such as Facebook. In an attempt to fight constantly falling print advertising revenues, most news publishers are making their content available on Facebook through initiatives such as Facebook Instant Articles and Facebook seems to be the main beneficiary of such initiatives as engagement increases on the social network platform. Facebook has seen its market value gain 12% since the start of 2016. Andreas Halvorsen’s Viking Global acquired a new stake of 20.13 million shares of Facebook Inc. (NASDAQ:FB) during the first quarter.

Rob Citrone Discarded His Entire Stake in Yum! Brands Inc. (NYSE:YUM) during Q1

– Number of shares owned by Discovery as of March 31: 0

– Value of Discovery’s holding as of March 31: o

Discovery Capital Management sold out its entire 2.20 million-share stake in Yum! Brands Inc. (NYSE:YUM) during the March quarter. The operator and franchisor of KFC, Pizza Hut and Taco Bell restaurants has seen its shares gain 12% thus far in 2016. In October 2015, the company announced plans to spin-off its China business into an independent, publicly-traded company by the end of this year. While Yum! Brands is said to cash out an investment in a country with massive upside potential, the company is also reducing exposure to significant risks and volatility that come out of the world’s second-largest economy. Several trustworthy news outlets recently reported that a group of investors backed by sovereign fund China Investment Corp. seeks to acquire a controlling stake in Yum!’s China business, which is valued in the range of $7 billion-$8 billion. In the first quarter of 2016 that ended March 19, China Division total revenues increased to $1.30 billion from $1.26 billion, while same-store sales increased 6% year-on-year. Keith Meister’s Corvex Capital reported ownership of 21.04 million shares of Yum! Brands Inc. (NYSE:YUM) through the latest round of 13Fs.

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