Chase Coleman's Tiger Global Enters the Gold Trade: 13F Filing Q1 2009 ~ market folly

Monday, June 15, 2009

Chase Coleman's Tiger Global Enters the Gold Trade: 13F Filing Q1 2009

This is the 1st Quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings series preface.

Next up is Chase Coleman's Tiger Global. Chase Coleman is yet another 'Tiger Cub,' or manager who learned their trade under the watch of Julian Robertson while at Tiger Management. We track Coleman's Tiger Global due to their strong historical performance and proven fundamental research methodology. In fact, Tiger Global is one of the hedge funds that comprises the Tiger Cub Portfolio created with Alphaclone where you can replicate their positions and enjoy 15.5% annualized returns since 2000. The numbers say it all and Tiger Global's contribution to such a portfolio is one of the many reasons we follow them.

We recently ran a profile of Julian (Chase's mentor) and talked about one of his big investment bets as well. We've additionally covered many of the 'Tiger Cub' funds' portfolios including Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, among many others. And, late last year, many of these managers gathered at a 'Tiger Cub' hedge fund manager panel, where they laid out investment theses for the future.

Chase Coleman attended Williams College and his focus in the markets has always been on smaller cap names and on technology. Although, he has since expanded his horizons with time. An interesting fact about Coleman is that he is a descendant of Peter Stuyvesant, the man who built the wall that gave Wall Street its name. He was clearly born for Wall Street. In 2007, Tiger Global returned 70%, and from 2001-2007, Coleman bolstered an average return of 47%. In terms of other activity, we posted about Tiger's amended 13D filing on Longtop Financial Technologies (LFT). In terms of recent performance, we saw that Tiger was -12.9% for April and were -8.1% for the year at that time as noted in our April hedge fund numbers. Their poor performance has been due to pain from their financial and REIT short positions, which they discussed in their quarterly letter.

The following were Tiger's long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
SPDR Gold Trust (GLD), Select Sector Energy (XLE), Priceline (PCLN), Powershares QQQ (QQQQ), Teradata (TDC), Semiconductor etf (SMH), Cisco Systems (CSCO), Paychex (PAYX), New Oriental Education (EDU), Electronic Arts (ERTS), Crown Holdings (CCK), Gymboree (GYMB), Cognizant Technology (CTSH), Monsanto (MON), Nike (NKE), & National Financial (NFP) Bond

Some Increased Positions (A few positions they already owned but added shares to)
Google (GOOG): Increased by 127%
Apple (AAPL): Increased by 100%
iShares Russell 2000 (IWM): Increased by 75%
Altria Group (MO): Increased by 38%
CSX (CSX): Increased by 25%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Microsoft (MSFT): Reduced by 69%
Qualcomm (QCOM): Reduced by 63%
Johnson & Johnson (JNJ): Reduced by 36%
Diamonds (DIA): Reduced by 27%
SPDR S&P500 (SPY): Reduced by 25%
Mastercard (MA): Reduced by 24%

Removed Positions (Positions they sold out of completely)
Walmart (WMT), LDK Solar (LDK), JA Solar (JASO), WNS (WNS), Yingli Green Energy (YGE), ETrade Financial (ETFC), & Ultrashort Real Estate (SRS)

Top 15 Holdings (by % of portfolio)

  1. Mastercard (MA): 7.85% of portfolio
  2. Longtop Financial (LFT): 7.58% of portfolio
  3. Lorillard (LO): 7.43% of portfolio
  4. SPDR S&P500 (SPY): 7.4% of portfolio
  5. SPDR Gold Trust (GLD): 7% of portfolio
  6. Visa (V): 6.17% of portfolio
  7. Select Sector Energy ETF (XLE): 5.1% of portfolio
  8. Priceline (PCLN): 4.36% of portfolio
  9. Google (GOOG): 3.7% of portfolio
  10. Microsoft (MSFT): 3.2% of portfolio
  11. Mercadolibre (MELI): 3.2% of portfolio
  12. Apple (AAPL): 2.64% of portfolio
  13. Transdigm (TDG): 2.36% of portfolio
  14. Qualcomm (QCOM): 2.3% of portfolio
  15. Discovery Communications (DISCK): 2.29% of portfolio

Similar to almost all the other 'Tiger Cub' portfolios, Tiger Global holds large stakes in both Mastercard (MA) and Visa (V). We keep harping on this theme, but it's only because so many funds hold these names. They have a practical duopoly on the payment processing business and as the world evolves from paying with cash to paying with plastic, they stand to benefit. They bear no credit risk and are simply the 'middle men' in each transaction, pocketing a fee everytime someone buys something. So, while many could argue a massive recession is not the best time to own something related to consumer spending, all of the Tiger Cubs see real value in these franchises as a growing trend going forward.

For new positions, Tiger started a stake in SPDR Gold Trust (GLD) and brought it up to their 5th largest holding. This is yet another hedge fund who we've seen establishing a large stake in gold. And, this is intriguing to us seeing how Chase's mentor Julian Robertson does not like gold as a play on inflation. However, Chase seems to have his own thoughts regarding the precious metal. And, numerous other prominent and smart men agree with him. David Einhorn, Eric Mindich, John Paulson and many other fund managers have large gold positions via GLD. When you see a confluence of this many smart minds in the metal, you have to pause and wonder.

Tiger Global also holds once favorite name Lorillard (LO). We say 'once favorite' because many other Tiger Cubs have begun to sell out of the name, and only a few fund managers still have a prominent position left in it. But, Coleman's fund definitely is still a believer in the name. Coleman started a pretty hefty new stake in Priceline as he brought it up to his 8th largest holding. The only major name they completely sold out of was Walmart (WMT). In the quarter prior, it was over a 5% position for them. But now, they no longer own it.

Assets from the collective holdings reported to the SEC via 13F filing were $2.5billion this quarter compared to $2.2 billion last quarter, so we've seen a slight uptick in positions invested on the long side. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. Check back each day as we cover new fund portfolios. We've already covered Andreas Halvorsen's Viking Global, John Paulson's hedge fund Paulson & Co, Stephen Mandel's Lone Pine Capital, Eric Mindich's Eton Park Capital, John Griffin's Blue Ridge Capital, and David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Timothy Barakett's Atticus Capital, Lee Ainslie's Maverick Capital, Raj Rajaratnam's Galleon Group, Shumway Capital Partners (Chris Shumway), Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, and Whitney Tison's T2 Partners.

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