Philippe Laffont's Coatue Management Focused On Technology: 13F Filing ~ market folly

Wednesday, March 3, 2010

Philippe Laffont's Coatue Management Focused On Technology: 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Next up is Philippe Laffont's hedge fund Coatue Management. The fund was founded in 1999 and specifically focuses on technology, media and telecom. Coatue employs a typical long/short strategy and like to avoid big directional bets. Interestingly, one of Laffont's mantras is to "dare to be different." This means that he likes to focus on stocks not necessarily right in the spotlight. Laffont focuses on technology specifically and reportedly Coatue were some of the first to get their hands on an iPhone when it was launched. For more thoughts on the sector from Coatue, check out excerpts from their technology trends presentation. Laffont had previously worked for Julian Robertson's Tiger Management and as such is classified as a 'Tiger Cub' hedge fund. As such, the fund is part of the Tiger Cub portfolio that was created with Alphaclone and replicates a basket of stocks handpicked by these hedge fund managers.

The positions listed below were Coatue's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Brand New Positions
Crown Castle (CCI)
American Tower (AMT)
Qualcomm (QCOM)
SBA Communications (SBAC)
Palm (PALM)
MGM Mirage (MGM)
Popular (BPOP)
Amazon (AMZN)
Brocade (BRCD)
Amedisys (AMED)
Barnes & Noble (BKS)
Applied Materials (AMAT)
Emulex (ELX)
Fortinet (FTNT)

Increased Positions
F5 Networks (FFIV): Increased by 130%
Yahoo (YHOO): Increased by 51%
Synaptics (SYNA): Increased by 46.5%
Google (GOOG): Increased by 42.3%
Equinix (EQIX): Increased by 34.9%

Reduced Positions
E*Trade (ETFC): Reduced by 11.3% ~ we detailed their initial position back in August of 2009

Removed Positions (Sold out completely):
Research in Motion (RIMM)
Baidu (BIDU)
Sohu (SOHU)
Netease (NTES)
Taiwan Semiconductor (TSM)
Eastman Kodak (EK)
Bankrate (RATE)
Level 3 Communications (LVLT)
Synopsys (SNPS)
Microsemi (MSCC)
Netflix (NFLX)
Garmin (GRMN)
Nutrisystem (NTRI)
Silicon Motion (SIMO)
Sandisk (SNDK)
Novatel (NVTL)
Travelzoo (TZOO)
Gannett (GCI)
Utstarcom (UTSI)

Top 15 Holdings by percentage of assets reported on 13F filing

  1. Apple (AAPL): 17.27%
  2. Google (GOOG): 10.01%
  3. Equinix (EQIX): 8.85%
  4. F5 Networks (FFIV): 8.55%
  5. E*Trade Financial (ETFC): 6.20%
  6. Citrix Systems (CTXS): 6.12%
  7. Crown Castle (CCI): 5.93%
  8. TD Ameritrade (AMTD): 5.16%
  9. Visa (V): 4.1%
  10. American Tower (AMT): 3.63%
  11. Yahoo (YHOO): 3.16%
  12. Qualcomm (QCOM): 2.47%
  13. SBA Communications (SBAC): 2.41%
  14. Palm (PALM): 2.19%
  15. Synaptics (SYNA): 2.01%

As you can see, Coatue Management is definitely focused on technology. Hedgie favorites Apple and Google dominate the bulk of the reported long US equity positions in their portfolio. Not far behind though is Equinix (EQIX), another play we're starting to see more managers add and we already know Shumway Capital Partners has a large EQIX stake too. Additionally, the tower stocks theme is heavy here as Coatue owns all three majors: CCI, AMT, and SBAC. Not to mention, they just started these brand new stakes all this past quarter. This is a bit different as we've seen many other hedgies favor one tower stock over the other. John Griffin's Blue Ridge, for instance, favors CCI. Coatue has exposure to all three though.

Another thing we noticed was their exposure to the brokerages through a large position in E*Trade Financial and a slightly smaller one in TD Ameritrade. Price wars in the online brokerage industry are heating up and many see ETFC as a takeover target. In terms of positions they sold completely out of, Coatue dumped RIMM, BIDU, and SOHU, all which were previously quite large positions for them. They didn't alter their previously owned positions too much. The vast majority of their maneuvers were made via purchasing brand new positions or completely dumping others.

Given all the negativity surrounding shares of Yahoo (YHOO), it was also intriguing to see them add to their stake. Some argue this is now a value play, while others argue the company is quickly being left behind the rest of the tech pack. Clearly Coatue sees some sort of value here and this fits Laffont's road-less-traveled mantra. Overall, if you're looking for good bets on the technology sector, you've certainly come to the right place. Not to mention, many of their holdings are among the top stocks held by hedge funds.

Data used for this article comes from Alphaclone, our source for backtesting strategies and sorting through all the hedge fund portfolio maneuvers with ease. Assets reported on the 13F filing were $2.0 billion this quarter compared to $2.2 billion last quarter, a slight decrease in exposure. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners, Chase Coleman's Tiger Global, Philip Falcone's Harbinger Capital Partners, Roberto Mignone's Bridger Management, Thomas Steyer's Farallon Capital, John Burbank's Passport Capital, Brett Barakett's Tremblant Capital, and George Soros' hedge fund Soros Fund Management. Check back daily for our new updates.

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