Coatue Management Increases Shopify Stake

Philippe Laffont's hedge fund Coatue Management has filed a 13G with the SEC regarding Shopify (SHOP) shares.  Per the filing, Coatue now owns 8.2% of SHOP with over 7 million shares.

This is up from their previous ownership stake of only 2.62 million shares at the end of the second quarter.  The new filing was made due to activity on October 24th.

Per Google Finance, Shopify is "provides a cloud-based, multi-channel commerce platform designed for small and medium-sized businesses. The Company offers subscription solutions and merchant solutions. The Company's software is used by merchants to run their business across all of their sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts and marketplaces. The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships and leverage analytics and reporting all from one integrated back office. The Shopify platform includes a mobile-optimized checkout system, which is designed to enable merchants' consumers to buy products over mobile Websites. Its merchants are able to offer their customers the ability to check out by using Apple Pay."

Coatue Management Reduces Twilio Position

Philippe Laffont's hedge fund firm Coatue Management has filed an amended 13G with the SEC regarding their position in Twilio (TWLO).

Per the filing, Coatue now owns 3.8% of TWLO with 437,152 shares.  This is down from the 625,000 shares they previously reported owning.  This filing was due to activity on July 25th.

Per Google Finance, Twilio "offers Cloud Communications Platforms. The Company enables developers to build, scale and operate real-time communications within software applications. It Programmable Communications Cloud software enables developers to embed voice, messaging, video and authentication capabilities into their applications via its Application Programming Interfaces. The Super Network is its software layer that allows its customers' software to communicate with connected devices globally. It interconnects with communications networks around the world and continually analyzes data to optimize the quality and cost of communications that flow through its platform. The Programmable Communications Cloud consists of software products that can be used individually or in combination to build rich contextual communications within applications. The Programmable Communications Cloud includes Programmable Voice; Programmable Messaging; Programmable Video; Use Case APIs, and Add-on Marketplace."

Coatue Management Files 13G on Twilio

Philippe Laffont's hedge fund firm Coatue Management has just filed a 13G with the SEC regarding shares of Twilio (TWLO).  Per the filing, they now own 6.25% of the company with 625,000 shares.

Twilio recently went public in late June.  However, Coatue previously invested when Twilio was still private.  The company's blog notes that Coatue participated in its Series E round back in July 2015.

Per Google Finance, Twilio "offers Cloud Communications Platforms. The Company enables developers to build, scale and operate real-time communications within software applications. It Programmable Communications Cloud software enables developers to embed voice, messaging, video and authentication capabilities into their applications via its Application Programming Interfaces. The Super Network is its software layer that allows its customers' software to communicate with connected devices globally. It interconnects with communications networks around the world and continually analyzes data to optimize the quality and cost of communications that flow through its platform. The Programmable Communications Cloud consists of software products that can be used individually or in combination to build rich contextual communications within applications. The Programmable Communications Cloud includes Programmable Voice; Programmable Messaging; Programmable Video; Use Case APIs, and Add-on Marketplace."

Coatue Management Discloses Square Position

Philippe Laffont's hedge fund firm Coatue Management has filed a 13G with the SEC regarding shares of Square (SQ).  Per the filing, Coatue now owns 5.99% of the company with over 1.89 million shares.

The filing was made due to activity on April 12th.  Coatue previously did not report a stake at the end of 2015.  Square went public in the later half of 2015.

Per Google Finance, Square "provides financial services and marketing services. The Company also provides payments and point-of-sale (POS), which include hardware and software to accept payments, streamline operations, and analyze business information. The Company's payments and POS services include In-Person Payments, Online Payments, Square Cash, Square Register, Square Analytics, Square Appointments and Square App Marketplace. The Company's financial services include Square Capital and Square Payroll. The Company's marketing services include Square Customer Engagement and Caviar. The Company's mobile payments and POS services transform the checkout process and advance digital and mobile commerce by untethering sales from long lines and antiquated cash registers. The Company provides sellers a range of options for accepting payments in-person or online. The Company acts as the merchant of record for its sellers.."

Coatue Management & Maverick Capital Short Ashtead Group

Philippe Laffont's hedge fund firm Coatue Management has recently filed a disclosure with the UK's regulatory body regarding a short position.  They are now short 1.02% of Ashtead Group's (LON:AHT) shares as of September 30th.  This is up from the 0.91% of shares they were short just two days prior.  This is also an increase from the 0.52% they were short back on August 6th.

Lee Ainslie's hedge fund Maverick Capital has also filed similar disclosures.  Per their filing, Maverick now is short 0.74% of Ashtead Group as of September 24th.  However, Maverick's position has decreased in size recently from the 0.85% of shares they were short on September 23rd.


Given the volatility in markets as of late, we're providing updates on various hedge fund short positions.  You can scroll through them all by clicking here: hedge fund short positions.

The UK regulatory rules for short position disclosures state that hedge funds must file when their net short position eclipses 0.2% of the issued share capital of a company.  Notification is also required again at each 0.1% increment after that.  This applies to both increases and decreases in the position.  Public disclosure is required when net short positions reach 0.5% of issued share capital.  Additionally, disclosure is required when the position subsequently falls below 0.5%.

Per Google Finance, Ashtead Group is "a United Kingdom-based equipment rental company with networks in the United States and the United Kingdom. The Company operates through two business units: Sunbelt, which provides pump and power, climate control and scaffolding service, and A-Plant business, which operates through Eve Trakway Limited (Eve), which constructs temporary roadways and barriers; PSS, which offers trenchless technology and fusion services, and FLG (lifting) services. Both the units are also engaged in general equipment and related businesses. The Company rents a range of construction and industrial equipment across a range of applications. Its equipment can be used to lift, power, generate, move, dig, compact, drill, support, scrub, pump, direct, heat and ventilate. Its subsidiaries include Ashtead Holdings PLC, Sunbelt Rentals, Inc., Sunbelt Rentals Industrial Services LLC, Ashtead Plant Hire Company Limited, Ashtead Capital, Inc. and Ashtead Financing Limited."

Sohn Conference Notes New York 2014: Einhorn, Tudor Jones, Shumway, Laffont & More

Below are notes from the 19th annual Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  As always, top hedge fund managers pitched their latest investment ideas to benefit pediatric cancer research.  Here's this year's edition.


Sohn Investment Conference Notes: New York 2014

David Einhorn (Greenlight Capital): Short Athena Health

Bill Ackman (Pershing Square): On GSE's Fannie/Freddie

Philippe Laffont (Coatue Management): Long Liberty Global

Chris Shumway (Shumway Capital): Short the CNH, long Moody's

Larry Robbins (Glenview Capital): Long Humana, WellPoint, Monsanto

Paul Tudor Jones (Tudor Investment Corp): On the macro environment

Michael Novogratz (Fortress Investment): The case for Brazil

James Grant (Grant's Interest Rate Observer): On Russia and Gazprom

Jeff Gundlach (DoubleLine): Short homebuilders

Zach Schreiber (PointState Capital): Long refiners Valero & Marathon

Mariko Gordon (Daruma Capital): 3 long ideas

Dan Ariely (Duke University): On the psychology of money

Investment Contest Winner: Michael Guichon: long Fiat


And if you missed it earlier, we also posted up notes from the Next Wave Sohn Conference.  This was the mini-conference that took place before the main event where emerging managers pitched their latest ideas.

Philippe Laffont Long Liberty Global: Sohn Conference Presentation

We're posting up notes from the Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  Next up is Philippe Laffont of Coatue Management who pitched Liberty Global (LBTYA/K) long.


Philippe Laffont's Sohn Conference Presentation

Tech Media Telecom investor.  Was at Tiger before founding Coatue.

IDEA1: Long Liberty Global. LBTYA. Similar pitch to last time, which was Virgin Media, which was bought by Liberty Global. (He's owned LBTYA for a while now).

Says  cable is best infrastructure for high-speed broadband.  Says Fiber is too expensive and wireless is too hard because you need expensive spectrum. NFLX is just rolling out in Germany, France.  It is 30% of the broadband in the US, and this trend will occur in Europe next. 

Comments on merger activity in cable and telecom: he expects more consolidation. TWC and CMCSA happening. Sprint and T-mobile? DirectTV and AT&T?

Liberty Global could be bought by Vodafone. AT&T could buy Vodafone and Liberty Global. CMCSA could buy Liberty Global. Liberty Global could add new assets. So LBTYA could double from $40 to $90 by 2018.

Be sure to check out the rest of the presentations from the 2014 Sohn Investment Conference.

Coatue Management Dumps Longstanding Equinix Position

Philippe Laffont's hedge fund Coatue Management has just filed an amended 13G with the SEC regarding Equinix (EQIX).  The filing indicates that they no longer own a position in the company as of December 31st, 2013.

This is significant news when you consider EQIX had been one of Coatue's top holdings for quite some time.  At the end of the third quarter, they owned a stake worth over $820 million and so they liquidated their stake during the fourth quarter when shares traded between $152 and $185.

Earlier, we also pointed out JANA Partners' thesis on EQIX as they have built up a stake in the company throughout 2013.

Coatue's Philippe Laffont on Investing & Career Advice: Interview

Philippe Laffont, founder of hedge fund firm Coatue Management, recently sat down with OneWire to give an interview on investing, his career, how he got started, and advice for others.


Laffont on Investing

On how to think as an investor: "For us, the key to investing is thinking: how can a company perform 3 to 5 years out?  Not to focus so much on the short term, try to see the forest from the trees, think about the long term.  Few people in the market think about the long term, and that's our edge.  It's patience and long term thinking."


On going long:  "The long side is hard because you're trying to project what can happen 5 years out and then come back.  It so happens, it's much easier to disprove things."


On short selling:  "If there's enough red flags, sooner or later it's like a sand castle, there's too many bad pillars.  Sooner or later, the castle crumbles.  The short side is more about pattern recognition and seeing odd things.  If there's enough odd things, that leads you to believe the company is wrong.  There's a second type of short, which is opposite of your long, which is: if Google does well, the Yellow Pages are probably not going to do well.  If Apple does well, that's probably not great for Nokia/RIM.  So that's the sort of thesis/anti-thesis winner vs loser. There's a whole big other group of shorts that are like strange anomalies that you have to pick."


On Coatue's beginnings:  "We started with $50 million in 1999.  In our first few years, the Nasdaq was down 80%.  In your professional life, more than once, you're going to come across something that goes absolutely the opposite way of what you were hoping."


On how he started as an investor:  ""We (he and his brother) started buying tech stocks in the 90's, blue chip's like Microsoft, Intel, stuff we knew (like Peter Lynch's approach).  We confused luck with skill.  But nevertheless, it gave us the passion.  If the market had gone down in those three years, I would have been doing something else.  The luck is very important."


Laffont's Career Advice

His advice: "The career advice I would have for people, is you need to do two things when you graduate. You need to do them both passionately. You need to do one thing passionately that is the obvious thing that you are supposed to do after you graduate (if you are in business, go to Goldman Sachs or Morgan Stanley).  At the same time you do that, in my mind, you need to do one thing completely off the beaten path, but also passionately.”

If you're seeking an investment career, he strongly advocated going to the big investment banks for 2-3 years in a "competitive" environment because you'll get the training you need, you'll see if you have the passion for it, and you'll learn a lot.

On seizing the moment: "When someone opens a door for you.. and everyone in life will have a few times doors opened... you have to come to that meeting prepared to achieve one thing.  For me, I knew I would speak with (Julian Robertson) for 1 minute, I went right for it (asking for a job)."


For more on Coatue's founder, we posted up Laffont's most recent media appearance on technology trends.

Embedded below are the videos of Laffont's OneWire interview, h/t to ValueWalk:

Video 1




Video 2



For other rare interviews with 'Tiger Cub' hedge fund managers, we also posted up Viking Global's Andreas Halvorsen and his thoughts on investment process.

Coatue's Philippe Laffont on Apple, Google & Technology/Media Trends

Coatue Management's founder Philippe Laffont appeared on Bloomberg TV today to talk about tech stocks, including Apple (AAPL), Google (GOOG), and others.  He says that tech stocks are 'historically cheap' and he's always on the lookout for the new trends.


On Apple (AAPL)

"It’s cheap by any measure. The key is not to think whether stock will be up $50 in the next few months. The key is what would it take for Apple to get to $800. It would be a great return if just from today it went back to $600. To me, the company has to take back the offense. The company has been a little bit put on defense. Samsung and Google have been very strong competitors... at some point Apple is going to take back the offense."

Laffont was asked why he is still bullish on the name and while Coatue still owns shares, our Hedge Fund Wisdom newsletter flagged that the hedge fund sold 55% of its AAPL stake at the end of 2012 so that's worth keeping in mind.  They've been a long-term bull on the name. 

Laffont wants to see the company make product moves and make better use of cash, saying:

"The company is so big that how they use the cash is going to determine value, there’s no way about it. But there are going to be some new products coming in. I think they have some things up their sleeve."

Coatue reportedly hosted AAPL's CFO at their investor day earlier this year.  Laffont hinted that AAPL should make some acquisitions as well as he wants the company to bring on some new talent and ideas.


On Google (GOOG) 

Laffont thinks the tech giant could be a triple in 5-7 years from now, trading at just 5x earnings.


On Storage & "The Cloud" 

He sees storage as a long-term trend as data continues to move to the cloud.  One of his largest investments in public markets is datacenter provider Equinix (EQIX).  Coatue has recently started making private investments and Box.net was one of their first (another play on this trend).


Talking Other Tech Companies 

He also commented on how there's a new 'four horsemen' of tech: Google, Apple, and Amazon.com (AMZN), original members of the group remain, but he would add Samsung and Twitter to that bunch.  He says Twitter has huge strategic value, but little revenue so it's hard to value.  On Facebook (FB), Laffont feels that in an increasingly mobile world, advertising is a lot harder.


On Tech Value Traps & Shorts

The Coatue manager went on to note that while many investors in other sectors look for bargains and 'cheap stocks,' tech isn't necessarily the best place to do that because a lot of times in this sector these cheap stocks are actually value traps.  He listed Hewlett Packard (HPQ), Microsoft (MSFT), and Intel (INTC), citing a rising mobile computing world.

He also mentioned his firm was exploring a concept on the short side he called a 'paperless office' where people are all using iPads and people don't need/use paper as much.  He says that, "A lot of the companies stuck in the desktop/printer world are going to have a tough time going forward."


On Media & Content

Laffont's content theme focuses on smartphones and how everyone will have one eventually and want to consume content on those devices (citing Netflix (NFLX), HBO Go, ESPN).  He thinks the world will move towards content being monetized in very different ways.  He said he likes Time Warner (TWX), CBS (CBS), and News Corp (NWSA).


Embedded below is the Bloomberg TV video of Philippe Laffont's appearance:



To see the rest of Coatue's portfolio, head to the new issue of our Hedge Fund Wisdom newsletter that was recently released.

Coatue Management's Philippe Laffont on Facebook, Apple, Equinix, Virgin Media & His Portfolio

Coatue Management's hedge fund founder Philippe Laffont gave his first-ever interview to Bloomberg Television yesterday and talked about Facebook (FB), Apple (AAPL), Equinix (EQIX), Virgin Media (VMED) and his portfolio in general.


On Facebook's IPO (FB)

"It is clearly an incredible company and it also has an incredible management team. One of the things to respect about Mark [Zuckerberg] is that he has surrounded himself with great executives. The tough part about an investment is you are looking for good businesses, good management team, but it is different if you buy a stock at 30 or at 100." 

"I would like to get as many shares as possible. That's what probably everyone wants to do.  I'm sure the stock is incredibly oversubscribed. The real decision is what will happen.  We have lots of previous examples (of risks), both in the year 2000, 1999, but even as recently as LinkedIn. LinkedIn had a small float. The stock started at a low IPO price. The stock moved all the way up, came all the way back down, and in a few months later it's back to where it started. It is possible the same happens to Facebook. I do not know.  It is a great business. Not only do they have the potential to grow their advertising a lot, but in addition they are making money with mobile games. They have a lot of new potential growth products."


On Apple (AAPL)

"[We invested in Apple] 2003. When we got involved with Apple, the stock was at $10. We did not get involved until maybe it was at $100. We missed the whole iPod. When the iPhone came in, we thought it would be a repeat of the iPod. Today you still have the iPhone 5 coming out, which I think will be an incredible product and then potentially Apple TV. This is an amazing company. They have so much growth going on. They represent 5-10% of the market and they can get a much bigger market share."


On His Concentrated Portfolio

"Concentration is a problem over the short-run, but it sort of goes away over the long run. We try to invest over the long-run and are willing to take the volatility. The less concentrated you are, the more your returns will look like the S&P or the Nasdaq. If you want to try to outperform, you have to focus on your best ideas. it is something we transmitted to investors from day one. They understand the risk. It puts a premium on being right."


On Equinix (EQIX)

"We pitched it at the Ira Sohn conference yesterday Equinix. It's a great story.  Basically, if I am Bloomberg, I want to get my news feeds from the NASDAQ and the New York Stock Exchange very close to me so I have the prices immediately.  By putting my servers right next to them, I can get those prices and send them out to all of my customers. Bloomberg needs to have their servers right next to the servers of these other companies, and that is what Equinix allows you to do." 

"I think the demand for the internet will continue to grow. We are in the early innings.  The company is growing 25-30% revenues and EBITDA. It should continue to do that…We started buying it years ago really and have just been adding on to the position. I think right now we might be the largest shareholder of the company."

MarketFolly note: What's interesting here is how Laffont mentions "we started buying it years ago really and have just been adding on to the position."  However, EQIX has only just now shown up as a 'new' position for them in the first quarter of 2012.  They did not disclose owning a stake in the fourth quarter of 2011.  

So, we searched through their previous 13F's filed with the SEC.  Going back a few years, we found that the last time they disclosed owning a stake in Equinix was in the first & second quarters of 2010.  EQIX then disappeared from their filings in the third quarter of 2010 as they apparently sold the stake.  And it hasn't shown back up in their 13F's. Until now.  

As such, Laffont's statement is a bit puzzling as his filings show they just re-entered the position.  The reason we bring this up is because there's a big difference between buying a position "years ago" versus establishing an entire stake in the first quarter.  

Maybe he simply meant to say that they've been involved in the name in the past and have recently acquired it again.  We've asked Coatue for clarification and will update if there's a response.


On Virgin Media (VMED)

"Virgin Media, whereas Equinix solves the problem at the core, Virgin Media solves the problem at the edge. Right now wifi enables many people to share the internet together in a household. Virgin Media has that pipe from the home back to the core back to Equinix.  It's the fastest pipe out there and with HD streaming and online games, you just need to have this fast pipe."


Coatue's Current Exposure

"Right now we have a conservative exposure to the market. It's sort of hard to dissociate. We have great equity valuations in the U.S. in some of the big tech names. But I can't ignore what is going on in Europe and China and elsewhere. I would say we are reasonably conservatively positioned.  It would be done though a combination that just in the way that we're looking for winners, we are also looking for losers, and we're hoping that our portfolio of winners and losers balances itself out. We also have some options of tail risk protection."



Embedded below is the video from Bloomberg TV's interview with Laffont:




For more from this manager, be sure to check out Laffont's presentation from Ira Sohn Conference two days ago.

Philippe Laffont on Equinix & Virgin Media: Ira Sohn Presentation

We're posting up notes from the Ira Sohn Conference.  Coatue Management's Philippe Laffont gave a presentation on going long Equinix (EQIX) and long Virgin Media (VMED).  He was previously a tech/media/telecom analyst at Tiger Management and currently runs $6 billion at Coatue.

"Old Internet Model is Broken"

Network based on safety, slow core, edge too slow. Shift from email, download video to HD streaming, cloud. "Speed is money" AMZN, 1 second of extra load time is $5B revenue loss.  Need to fix the core, and the edge of the internet.

Long Equinix (EQIX): Back in March, we flagged Coatue's purchase of EQIX. Laffont says Data-centers are the new core. "Network effect" because if FB is in the EQIX datacenter, everyone else wants to be there. Big cities, EQIX has huge share of internet backbone: SF 66%, Chicago 69%, DC 88%. Why can't everyone else just do this? Because carriers have set up peer points, and EQIX won the RFP for these spots, when no one knew how important it was. "Beach front property." 50% ROEs with minimal leverage. $1.6B revenue to 4.0B, EBITDA $700M to 2.1B. Stock triples or more.


Long Virgin Media (VMED): We highlighted when Coatue recently disclosed its VMED stake. $22. $6B company, $9B in debt. Edge. Need 50-100MBps now, up from 5-10-20 in past. (HD video) Fastest cable broadband network in UK. EBITDA $2500M less $1000M CAPEX, 20% unlevered ROIC. Broadband ARPU $26, $23 gross profit, better than cable TV, so mix shift helps. Only 4% revenue growth, 10% FCF growth, but they are also buying back shares, so 25% per share FCF. Buying 10% of shares this year alone, 25% in last few years. Has capacity to literally buy back all of it's shares in the next 5 years.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.

Coatue Management Discloses New Stake in Virgin Media (VMED)

Philippe Laffont's hedge fund Coatue Management just filed a form 13G with the SEC regarding shares of Virgin Media (VMED).  Per the filing, Coatue now owns 5.21% of VMED with 14,463,301 shares.

This is a brand new position for the hedge fund as they did not report holdings in the name at the beginning of the year.  The new activity was reported due to trading on May 2nd.

Per Google Finance, Virgin Media is "engaged in entertainment and communications business. The Company has two segments: Consumer and Business. The Company is a provider of broadband Internet, television, mobile telephony and fixed line telephony services that offer a range of entertainment and communications services to residential and commercial customers throughout the United Kingdom."

Coatue Management Starts New Position in Equinix (EQIX)

Philippe Laffont's hedge fund Coatue Management has initiated a brand new position in Equinix (EQIX). The fund filed a 13G with the SEC revealing that they now own 6.7% of the company.

Coatue owns 3,127,341 shares and filed the disclosure due to portfolio activity on March 8th. Shares of Equinix have rocketed higher in 2012, starting the year at around $100 per share and now trading around $140 per share.

Other large institutional owners of EQIX as of year-end 2011 include Lone Pine Capital, Eminence Capital, Highland Capital Management, and Millennium Management.

Per Google Finance, Equinix is "connects businesses with partners and customers globally through a global platform of data centers, containing dynamic ecosystems and a range of networks."

To see more of Coatue's investments, head to the new issue of our Hedge Fund Wisdom newsletter.

Philippe Laffont's Coatue Management Buys Universal Display (PANL)

Philippe Laffont's hedge fund Coatue Management just filed a 13G with the SEC regarding shares of Universal Display (PANL). In the filing, Coatue reveals they now own 6.3% of PANL with 2,881,463 shares.

This is a brand new position for the hedge fund as they previously did not own any shares at the end of the second quarter. Given that Coatue is fixated on technology, this investment plays right into their focus on the theme of mobility. PANL provides essential display parts to smartphones, tablets, etc.

Per Google Finance, Universal Display is "engaged in research, development and commercialization of organic light emitting diode (OLED), technologies and materials. OLEDs are thin, lightweight devices that emit light, making them highly suitable for use in full-color displays and as lighting products."

For more activity from this hedge fund, we've detailed how Coatue was buying SINA earlier this summer, a name that has been hit recently due to increased fears of regulation in China.

Philippe Laffont's Coatue Management Buys More Sina (SINA)

In a 13G filed with the SEC due to trading on June 1st, Philippe Laffont's hedge fund Coatue Management has increased its position in Sina (SINA). They now own 5.16% of the company with 3,187,477 shares.

Laffont's hedge fund focuses on technology, media, & telecom and you can view the rest of Coatue Management's portfolio in the new issue of our Hedge Fund Wisdom newsletter.

This is almost a 10% increase in their position size since March 31st when they owned 2,907,894 shares. Coatue isn't the only major hedge fund to have purchased shares of SINA recently either. John Thaler's JAT Capital acquired a massive SINA position as well.

Sina is a social media company based in China and needless to say is one of the hot investing trends right now. However, shares have seen heightened volatility as they've declined from a high of $147 in April to $86 per share currently.

Given the volatility in the past two weeks, it's tough to be entirely sure as to who which funds still hold a position. This stock is the definition of a 'momentum' name and it will be interesting to see who emerges as a true investor once the sell-off abates.

Philippe Laffont's Coatue Management Doubles Down on STEC (STEC)

In an amended 13G filing with the SEC, Philippe Laffont's hedge fund Coatue Management has disclosed a 7.5% ownership stake in STEC (STEC) with 3,763,221 shares. The filing was made due to activity on February 23rd, 2010 and represents a massive increase in their position. As we previously detailed in Coatue's portfolio, the hedge fund owned 1,864,941 shares of STEC back on December 31st, 2009. So, in the past three months, they've increased their position 101.8% by adding 1,898,280 more shares.

Coatue Management is a hedge fund founded by Philippe Laffont in 1999. They employ a long/short equity strategy and focus on technology, media & telecom stocks. For more on Laffont's hedge fund, head to our very recent post on Coatue's portfolio as well as our coverage of a technology trends presentation they've given in the past.

Taken from Google Finance, STEC is "a global provider of enterprise-class Flash solid-state drives (SSDs) for enterprise-storage systems and servers that companies use to retain and access their critical data. The Company’s products are designed specifically for storage systems and servers that run applications requiring a high level of input/output operations per second (IOPS) performance, capacity, reliability and low latency."

Keep up with the rest of our updates on hedge fund portfolios via our tracking series.

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.

Hedge Fund Coatue Management Files 13G on Silicon Motion Technology (SIMO)

In keeping with the theme of tracking Coatue Management's portfolio, we wanted to also post up their most recent portfolio activity as indicated by SEC filings. Since we hadn't been tracking them in-depth, we need to play a little bit for catch-up here. Philippe Laffont's hedge fund filed a 13G on Silicon Motion Technology (SIMO). They disclosed a 7.4% ownership stake in the company with 2,067,014 shares. This is an increase from their previous 795,514 shares reported on their most recent 13F filing (which shows holdings as of June 30th, 2009). As such, in the past 3 months Coatue has significantly boosted their SIMO stake. Just yesterday, we disclosed some of Coatue's positions in UK markets.

Coatue is a long/short equity hedge fund in the true sense of the definition. They specialize in technology, media and telecom. Fund manager Philippe Laffont is a 'Tiger Cub' and worked for Julian Robertson at Tiger Management. Now running his own fund, Laffont focuses on in-depth proprietary research of individual companies and sectors. Head over to our background post on Laffont and Coatue for more information on them.

Taken from Google Finance, Silicon Motion Technology is "a fabless semiconductor company that designs, develops and markets, high-performance, low-power semiconductor solutions for the multimedia consumer electronics market. It has three product lines: mobile storage business, multimedia systems-on-a-chip (SoC) business, and mobile communications business."

Philippe Laffont's Coatue Management: Technology Trends Presentation

Philippe Laffont’s Coatue Management is a specialist hedge fund that focuses on the sectors of Technology, Media and Telecom. The fund was established in 1999 and Laffont typically keeps a low profile, rarely doing media interviews. However, we recently found a presentation that Laffont gave to MIT Alumni in May of this year that we thought readers would enjoy. While it is a few months old, the themes are still very much relevant as they examine at the technological landscape from a top-down perspective. If you are interested in long/short equity hedge funds, technology stock picks, or both, we highly recommend you take a look at Laffont’s whole presentation by downloading the .pdf from MIT here (make sure you download it before MIT takes it down).

In particular, we wanted to highlight slide 14 from the presentation. This slide (pictured below) highlights the trend cycles in the technology sector as we progress from mainframes to personal computing to networking to the internet. They highlight possible winners in the current environment to be Google (GOOG), Apple (AAPL), Research in Motion (RIMM), Qualcomm (QCOM), and Amazon (AMZN). This would be par for the course in hedge fund land as we have highlighted numerous times in the past that GOOG, AAPL, and QCOM are some of the most widely held stocks amongst hedge funds. Additionally, Goldman Sachs' hedge fund trend monitor report highlighted the fact that the remaining technology plays RIMM and AMZN are highly favored as well.

(click to enlarge)

We also wanted to highlight slide 18 that examines current trends in TMT. They see smartphones as an obvious trend going forward as customers prefer mobility, playing right into the hands of AAPL and RIMM. They see Nokia (NOK) as a possible loser here due to their lack of growth in the smartphone arena. Instead, NOK has typically been successful in selling run-of-the-mill mobile phones. Additionally, Coatue highlights the expansion of cloud computing and virtualization and notes Citrix (CTXS) and VMWare (VMW) as key winners.

(click to enlarge)

In terms of management style, Coatue follows a classic long/short equity strategy in which big directional bets are avoided. Typically, long/short hedge funds have 100% gross long exposure and 70% short, producing a net long exposure of 30%. Very loosely speaking, long/short funds tend to underperform the market in strong rallies (like the one we have seen since March) but outperform when markets fall. And, if they are successful at stock picking, they will outperform in flat markets and generate alpha regardless of circumstances.

Laffont is one of the so-called 'Tiger Cubs,' or managers who once worked for Julian Roberson at Tiger Management that have gone on to start their own funds. (We have covered the Tiger Cub family tree before for those of you unfamiliar). Robertson will be speaking at this year's Value Investing Congress and we highly recommend attending, as we have secured a discount to the event for our readers. Laffont’s investment principles were certainly influenced by his mentor. Following Robertson’s dictum that “The market never spoke to him,” Laffont does not follow market timing or macro economic forecasts to get him in and out of the market. Instead, he favors an approach based on in-depth proprietary research of individual companies and sectors. Laffont encourages his staff to identify and research long term investment trends. The diagram we posted above (slide 14) shows some of the very long term trends in computing. These are the types of trends they look to predict, ride, and capitalize on.

One of Laffont’s stockpicking mantras is “dare to be different”. In other words, he seeks to take the road less traveled by focusing on stocks besides the ones in the spotlight. Given that Coatue is a sector specific fund, Laffont believes that specialization is important for success and he urges his staff to stay passionate about technology. Coatue staff members were reportedly amongst the first to get their hands on an iPhone when it was launched.

A final investment principle that Laffont emphasizes is the importance of capping your losses. He does not spell out exactly how losses are capped at Coatue which is a shame because it would be interesting to find out more in this regard. For example, do they use stop losses or are they prepared to sit with a losing position for a long time if they still like the story - in the way perhaps that Julian Robertson would have in years gone by?

Given all of the technology trend talk above, we now want to turn to Coatue's portfolio. In expanding our coverage of hedge fund positions in UK markets, we have this update for you. Coatue have two disclosed long holdings in the UK market at present:

	symbol	date	No. shares	% of equity	Estimate of price paid
Moneysupermarket.com Group	mony	11/01/2008	18167261	3.7	na
		01/06/2009	45959122	9.1	115p

Taken from Google Finance, Moneysupermarket.com Group PLC operates a United Kingdom price comparison Website. The Company provides customers with a free online service enabling them to compare a range of products in the insurance, money, travel and home services markets, and to find the product most suited to their needs. The Company’s Website enables customers to compare products by price, product features and service. In addition to these comparison services, the Company helps and supports customers to research the product they wish to purchase. This includes news articles, guides, video blogs, Web chats, and the ability to ask the views either directly of its employees or other customers in the Company’s forums. The Company operates two principal Websites: moneysupermarket.com and travelsupermarket.com.

Secondly, Coatue has also disclosed another stake:

Telecity Group Plc	TCY	27/12/2007	6014538	3	na
		15/01/2008	8485557	4.3	276p

Taken from Google Finance, TeleCity Group Plc is a pan-European provider of network independent data centers offering a range of scalable data centre services, and value added services, which include security, storage, messaging, disaster recovery, monitoring, application, and database management services. It has 20 data centers, which act as a content and connectivity hub, facilitating the storage, sharing and distribution of data, content and media.

Overall, very interesting information and a great glimpse into how a prominent hedge fund frames and researches their strategy. In the past, we've covered Coatue's E*Trade (ETFC) stake in US markets as well. We'll be covering Coatue more in-depth going forward so be on the lookout for more updates on this fund. And on the topic of various UK positions that hedge funds hold, we've already covered Moore Capital Management's positions, Lone Pine Capital's UK holdings (and their recent movements as well), Sprott Asset Management's defensive UK portfolio, as well as Citadel's positions.

Last, but certainly not least, make sure to visit our hedge fund portfolio tracking series for following all the footsteps the big funds make in US equities.