In May, Tiger Cub hedge fund Tiger Global Management (Tiger Cub funds are those founded by former employees of billionaire Julian Robertson’s Tiger Management) filed its 13F for the first quarter of 2013. We track these filings as part of our work researching investment strategies (for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). While the stock picks in this filing are a bit old by now, we can use our database to pick out stocks which Tiger Global has owned for at least two years, on the theory that its managers still like these names. Investors can then perform further research on any which seem like good values. Read on for our quick take on five of Tiger Global’s holdings as of the end of March which the fund also owned at least $80 million of in March 2011 (or see the full list of the fund’s stock picks).
Tiger Global reported a position of about 630,000 shares in Mastercard Inc (NYSE:MA) in its most recent 13F, making the credit card company one of its largest holdings. Mastercard trades at 26 times trailing earnings at its current price. Revenue and earnings have been growing- in the first quarter of 2012 net income was up 12% versus a year earlier- but the company would have to continue that level of performance for quite some time in order to prove a good buy at this price. It might be best to avoid the stock for now.
The fund owned 380,000 shares of Priceline.com Inc (NASDAQ:PCLN), a Tiger Cub favorite, at the beginning of April 2013. Once again, the market is valuing the stock quite aggressively although the travel website has been growing rapidly: its last quarterly report showed 26% revenue growth compared to the first quarter of 2012, with earnings up over 30%. With investors generally bullish on Priceline’s industry as a whole as well, the trailing P/E is 31. Growth rates have been high enough, however, that it may be worth considering as a growth stock.
Rounding out our list of stocks which Tiger Global has owned for at least the last two years is Baidu.com, Inc. (ADR) (NASDAQ:BIDU). The Chinese search engine’s revenue was up 40% in its most recent quarterly report compared to the same period in the previous year, but costs were higher as well to the point that earnings only rose 9%. It is valued at 23 times trailing earnings, so it would probably need to bring the growth rate of its profits up a bit going forward in order to justify the valuation. It might be worth looking into whether Baidu can hold its costs in line with revenue growth in the future.
As a result Baidu looks something like a target for future research, as was the case with Priceline, though of course investors should be aware that their valuations already have some future growth priced in. The credit card stocks have been performing decently, but probably not well enough to make them attractive at current valuations.
Disclosure: I own no shares of any stocks mentioned in this article.
