JAT Capital was founded by John Thaler in 2007 after leaving the private equity firm Shumway. Thaler graduated from the University of Chicago with a BA in economics and worked five years for the private equity firm Shumway, focusing on technology, media and telecom – he now runs a strategy with a focus on these industries. His firm, JAT Capital, is a long/short equity hedge fund based in New York City. In reviewing the firm’s most recent 13F – which is a filing with the SEC that reveals the majority of a hedge fund’s publicly owned securities – we have identified JAT’s top five stocks:
Liberty Media Corp (NASDAQ:LMCA) is JAT’s top stock pick as of 3Q 2012, accounting for over 7.9% of the firm’s total 13F portfolio. The media company was a new addition to JAT’s portfolio and is up over 50% during the last 12 months. With plans to spin off Starz Entertainment, Liberty should be able to better focus its operations, where the Starz spin-off will now allow Liberty to focus on Sirius and Barnes & Noble. Liberty invested some $200 million in Barnes & Noble for preferred stock that can be converted into 12 million shares.
Although the book retail business has been in decline, Barnes & Noble’s e-reader has been showing solid growth and is 2nd in the e-book market behind the Kindle. Liberty Media is still in its pursuit to acquire more than 50% of Sirius, where its Sirius investment should benefit from the satellite radio company’s niche and dominant position in the auto industry, where demand for autos is expected to be up in 2013.
From a valuation standpoint, Liberty is very much on the cheap side when compared to media giants Comcast and Time Warner – both trading at 18x earnings – compared to Liberty’s 8x. Billionaire Warren Buffett is the top fund owner of Liberty among those we follow with over 5 million shares (check out Warren Buffett’s top picks).
Expedia Inc (NASDAQ:EXPE) is JAT’s second largest 13F holding, making up nearly 7.4% of the firm’s 13F portfolio. Expedia is up 100% over the last twelve months and continues to be one of the top online travel companies. After spinning off TripAdvisor in 2011, Expedia has been spending more on marketing and advertising, but despite the higher spending, the online travel site still has a robust balance sheet with $2.3 billion in cash and only $1.3 billion in debt. The internet company also operates the Hotels.com site. Expedia is one of the leaders in the travel industry trading in line with in the industry at 25x earnings – compared to major peers Priceline (25x) and Ctrip (28x). Jim Simons is one of Expedia’s top investors (check out Jim Simons’ big bets).
Read on to see another addition to JAT’s portfolio…