Here's What This Hedge Fund Pioneer Has Been Buying
Editor's Note: A previous version of this article erroneously attributed the founding of Tiger Global Management to Julian Robertson, who founded the unrelated hedge fund Tiger Management. Charles Coleman, who once worked for Robertson, founded Tiger Global Management. The author and the Fool regret the error.
Every quarter, many money managers have to disclose what they've bought and sold via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Tiger Global Management. The company's reportable stock portfolio totaled $6 billion in value as of June 30, 2012, and contained just a few dozen stocks. Indeed, the top 10 holdings make up about 73% of the overall portfolio's value.
So what does Tiger Global's latest quarterly 13F filing tell us? Here are a few interesting details.
Tiger's main new holding was Facebook . When the company debuted on the market some months ago, we offered plenty of articles on how it was a risky bet (overpriced, unproven business model, privacy violations, management that doesn't inspire confidence, etc.). The stock is down more than 50% already, though, and some now see it as attractive, while others are still steering clear. To its credit, it is profitable and growing, but many of its shares are held by insiders who aren't able to sell for a few more months. Once they can, the stock may drop more.
Among holdings in which Tiger Global increased its stake were Arcos Dorados and Baidu.com . Arcos Dorados ("golden arches" -- get it?) is the largest franchiser of McDonald's restaurants in Latin America, and it has attracted investor attention because it's seen as being able to grow more briskly than McDonald's. It recently posted revenue up 15.5%, and its presence in rapidly growing emerging markets bodes well. Still, it faces currency fluctuations, and growth in regions such as Brazil has slowed lately.
Baidu.com, the search engine giant of China, has slumped as China's growth rate has slowed, but it's important to remember that China is still growing faster than more developed nations. Indeed, over the past year, Baidu's revenue and earnings have almost doubled, and their five-year average annual growth rates both top 70%. Meanwhile, much of China and Asia has yet to get online, representing huge growth potential.
Tiger Global reduced its stake several companies, including Frontier Communications . The stock sports a tempting 8.6% dividend yield, but the dividend was cut by more than 50% over the past few years, and it may get cut further, as the company is paying out more than it's bringing in. Frontier delivers telecom services to rural areas, but it's fighting a shift to mobile communications and has a lot of debt.
Finally, Tiger Global unloaded some companies completely, such as C&J Energy Services (NYSE: CJES). Despite some promising characteristics, part of the problem may be its heavy involvement in the controversial practice of fracking, which many would like to see curtailed. Some see the stock as undervalued and attractive, though, with a P/E ratio around five and net margins above 20%. It's been posting strong growth and has no debt, either.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.
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The article Here's What This Hedge Fund Pioneer Has Been Buying originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of McDonald's, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Baidu.com. Motley Fool newsletter services have recommended buying shares of Facebook, Baidu.com, and McDonald's. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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