Investors of a certain age -- myself included -- will always remember the name Julian Robertson, the founder of Tiger Management. He was one of the pioneers of the hedge-fund industry, and he built a cult-like following after turning $8 million in seed money in 1980 into more than $20 billion by the late 1990s. Robertson eventually retired and turned over the reins to the next generation. Among this group, one protégé stands out: Charles "Chase" Payson Coleman III.
If you don't know about him, then you should. He's steadily amassed a fortune -- and huge profits for investors -- by gaining early stakes in up-and-coming technology companies. That positioning enabled his firm, Tiger Global, to rack up a 21% annualized gain during the past decade. In fact, his fund was up a hefty 45% in 2011, making it the best-performing hedge fund in the country.
To be sure, Coleman's ability to buy companies before they go public helps him to generate returns the rest of us can only dream about. Yet, in recent months, he's been much more focused on publicly-traded stocks, building clear and concentrated positions in the technology and consumer space. He's also been an active seller of stocks that he says may be less relevant in this changing economy.
Tiger Global just released its second-quarter regulatory filing, so let's take a closer look in what Coleman is interested.
Ditching the old world
Coleman has historically held stakes in traditional media companies, but that's no longer the case. In the second quarter, he closed out long-held positions in Viacom (Nasdaq: VIA), Liberty Media (Nasdaq: LMCA), wireless firm Crown Castle (NYSE: CCI) and ticket vendor Live Nation Entertainment (NYSE: LYV). These companies all generate significant free cash flow, though Coleman presumably questions their relevance in the changing media landscape.
Coleman reinvested those proceeds into new or existing positions that collectively point to a clear theme. These include:
LBTYA), which shows that he's not necessarily as dismissive of traditional media as he is of U.S.-based media assets.An expanded position in European and South American broadband provider Liberty Global (Nasdaq:
FB) where he picked up 1.9 million shares at an average price of $29.60. The fact that shares now trade for just more than $21 shows a bit of bad timing, but Coleman is a clear believer in this controversial stock's business model.A new position in Facebook (Nasdaq:
AAPL), and now holds 1.4 million shares. That works out to be a $900 million stake, which isn't pocket change no matter how big your fund is.He also added to his position in Apple (Nasdaq:
BIDU). His current stake of 1.48 million shares is worth roughly $200 million. He also has a 2.4 million share stake in Chinese security software firm Qihoo 360 Technology (NYSE: QIHU). Lastly, he has been building a position in Chinese education firm TAL Education Group (NYSE: XRS).Coleman has been building a position in Baidu.com (Nasdaq:
Coleman's recent Facebook purchase wasn't the only case of bad timing. He also added roughly 80,000 shares to an existing 780,000 share stake in Priceline.com (Nasdaq: PCLN) at an average price of $689 a share. Shares went on to plunge in subsequent weeks, though as I noted here, they look poised to rebound back above $700 as investors look past the near-term weakness in European travel.
And though he made no changes in the second quarter, Coleman still holds a $600 million stake in Russian search engine firm Yandex (Nasdaq: YNDX). (I profiled this firm back in February.) Although it remains stuck in the low $20s, by making this his second-largest holding behind Apple, Coleman is obviously a true believer.
Risks to Consider: These moves only get filed quarterly with the SEC, so positions may have been adjusted since the end of June.
Action to Take --> It's notable that this top-performing manager is shedding exposure to old-line media companies such as Viacom while making ever-larger bets on newer technology firms, here in the United States as well as in emerging markets like China and Russia. Those markets are often considered speculative and risky, but Coleman clearly believes they offer the most robust long-term potential.