The so-called Tiger Cubs — protégés
of Julian Robertson, founder of the legendary hedge fund firm
Tiger Management — are often touted as the
quintessential bottom-up investors, whose unique skills enable
them to uncover individual gems overlooked by most others.
This reputation is well deserved most of the time, as
members of this group run some of the industry’s
largest and most well-established hedge-fund firms and
frequently rank among the top performers. That’s
especially true this year, with Tiger Cub-run funds like
Stephen Mandel’s Lone Pine Capital, Chase
Coleman’s Tiger Global, O. Andreas
Halvorsen’s Viking Capital and Philippe Laffont's
Coatue Management poised to post gains of between 20 percent
and 35 percent. But upon closer inspection, it appears that
they and many of the other Tiger offspring can thank a small
handful of the same stocks for their success.
Many of the famous and not-so-famous Tiger Cubs own all or
most of a small group of about a half dozen technology,
Internet and media stocks. These include Apple, Google,
Priceline.com, Liberty Global, and Tripadvisor, and to a lesser
extent Amazon.com and Qualcomm. In most cases, these stocks
rank among each of these funds’ top-10 holdings.
Their exposure to these stocks is magnified by the fact that
descendants of Robertson’s hedge fund laboratory
typically run concentrated portfolios, so the largest holdings
generally play outsize roles in their returns.
In fact, one of the largest, most successful Cubs —
Lee Ainslie’s Maverick Capital — owned
all seven of these stocks. Coatue and Tiger Management owned
six of the stocks, while four others (John
Griffin’s Blue Ridge Capital, Christopher
Hansen’s Valiant Capital Management, Lone Pine and
Tiger Global) owned five of these seven stocks. Valiant owned
these stocks in a portfolio of just 19 individual issues.
What’s more, Apple was the number one holding
among nine prominent Tiger Cubs. Altogether at least 17 Cubs
owned the stock at the end of the third quarter.
On Monday, the brokerage and investment banking firm Stifel
Nicolaus reiterated its Buy recommendation and $825 target
price for Apple, telling clients in a note that it is not
concerned about a recent wave of discounting for its iPhone and
iPad for the holiday shopping season. The stock is up 26
percent this year even though it has fallen 25 percent in the
past three months.
Google was the largest holding among three of the funds and
the second largest position among another five Cubs. At least
16 Cubs owned these shares, including three that made it their
number one holding: Tiger Consumer Management, Hoplite Capital
Management and Bridger Management.
On Monday, Credit Suisse Securities repeated its Outperform
rating and $847 price target on Google, stressing it has high
conviction on the stock after seeing it trade mostly sideways
for most of the year. Google’s stock is up more
than 8 percent this year.
At least 14 Cubs owned shares of Priceline.com, including
nine that counted the stock among their top-10 holdings. In
fact, it was Lone Pine’s largest holding. Credit
Suisse recently highlighted the stock as one of its top
investment ideas, with a target price of $838, calling it a
"share gainer in the online travel sector and likely winner in
the crucial hotel reservation segment" in a recent note to
clients. Priceline.com’s stock is up more than 31
percent this year.
Liberty Global is owned by at least 10 large Tiger Cubs, of
whom half count it among their top-four holdings. It is up 47
percent in 2012.
TripAdvisor is another popular choice among the Cubs,
although this stock is not as frequently found among their
largest holdings. Still, at least nine members of this group
own the stock. It is up more than 65 percent for the year.
Qualcomm, the telecommunications equipment giant, is not as
popular as the other six stocks. Yet it is found in the
portfolios of at least six of these firms and is among the
largest holdings at Maverick and Viking. The stock is up more
than 9 percent this year.
Interestingly, one firm that owns six of these seven stocks
is Julian Robertson’s Tiger Management itself.
Obviously, the Cubs still keep the 80 year-old in the loop.