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Billionaire Julian Robertson’s Long Term Stock Picks

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Billionaire Julian Robertson‘s hedge fund Tiger Management, disclosed an equity portfolio valued at some $509.8 million as of the end of 2014. The equity portfolio is mainly invested in Technology (25%), Consumer Discretionary (24%) and Health Care (21%) stocks. Tiger Management’s last 13F filing showed that the fund raised its exposure towards consumer discretionary and health care stocks, but Mr. Robertson reduced his holdings in the tech and industrials sector. Among 10 largest holdings from Tiger Management’s equity portfolio (which amass 70.15% of the total portfolio value), several companies represent long-term bets. Among these companies are Gilead Sciences Inc. (NASDAQ:GILD), Delta Air Lines Inc. (NYSE:DAL), and BioDelivery Sciences International Inc. (NASDAQ:BDSI).

Julian Robertson

In this article we will look into Mr. Robertson’s top three picks held at the end of 2014. Two of these companies are large-cap stocks, which is obvious to see why, since the majority of most popular stocks among the hedge funds that we track are represented by large-cap companies. However, mimicking the activity of these funds by investing in their large-cap picks is not the best strategy for retail investors, since our tests of a portfolio consisting of 50 most popular picks among hedge funds underperformed the market by 7.0 basis points per month between 1999 and 2012. On the other hand small-cap picks have a better chance of helping an investor to beat the market, since our small-cap strategy returned 132% since the end of August 2012 until March 2015.

In Gilead Sciences Inc. (NASDAQ:GILD), Tiger Management holds 533,911 shares, up by 21% on the quarter; the value of the stake amounts to $50.32 million. The famous investment guru initiated a stake in Gilead Sciences Inc. (NASDAQ:GILD) with 387,000 shares during the second quarter of 2013. It is important to mention that the stock gained about 26.9% during 2014. Moreover, as we analyzed the data from the latest round of 13F filings, Gilead Sciences ranked among ten most popular healthcare stocks among over 730 hedge funds that we track and was also one of the favorite healthcare stocks among billionaire investors.

The popularity of Gilead Sciences among investors seems obvious. The firm is a biopharmaceutical company, which discovers, develops, and commercializes medicines in North America, South America, Europe, and the Asia-Pacific. Gilead Sciences has good profit margins (net margin of 48.62% at the end of 2014), while is focusing on others high-margin markets. An example is the approval of hepatitis C drug Sovaldi during 2013. The results appeared quickly as Sovaldi and Harvoni reached $12.4 billion in sales in 2014. This level indicates that the $11 billion acquisition of Pharmasset was a good bet. Although the firm has a leading market position in treating HIV virus, competition never stops and it peers could introduce new products in the future.

For the fourth quarte of 2014 Gilead Sciences Inc. (NASDAQ:GILD) posted revenues of $7.3 billion compared to $3.1 billion for the fourth quarter of 2013. Along with this, earnings per share (EPS) have significantly increased in the fourth quarter of 2014 to $2.18 from $0.47 a year earlier. Among the funds that we track, the largest shareholder of Gilead Sciences Inc. (NASDAQ:GILD) is Cliff Asness’ AQR Capital Management, which upped its stake by 114% on the quarter to 4.83 million shares held as of the end of 2014.

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