Chase Coleman’s Tiger Global Management disclosed that it has enlarged its position in 58.com Inc. (NYSE:WUBA) by 10.74 million shares since the reporting period of the firm’s most recent 13F filing, according to a 13G form filed with the SEC. According to the recently-released filing, Tiger Global Management currently owns 13.19 million shares in the Chinese online marketplace, which represent 6.3% of its outstanding common stock.
Tiger Global Management is a fundamentally-oriented investment firm established by Tiger Cub Charles Coleman in 2001. The New York-based firm specializes in long/short equity investing by employing a fundamental analysis approach. As the fund’s name suggests, Tiger Global makes its investments globally and is primarily seeking opportunities in China, Southeast Asia, Latin America, and Eastern Europe. The firm is currently undergoing a significant management change, as Feroz Dewan, one of the firm’s investment heads, has recently left to start his own investment firm. Feroz Dewan had managed the firm’s $6 billion hedge fund business since 2003. Following his departure, Scott Shleifer has taken the reigns of Tiger Global’s public equity business, which currently manages $10 billion in assets. According to the latest 13F filing for the period as of the end of the first quarter of the current year, Tiger Global Management oversees a public equity portfolio worth $9.12 billion.
Follow Chase Coleman's Tiger Global Management LLC
Hedge funds and other big money managers like Chase Coleman tend to have the largest amounts of their capital invested in large and mega-cap stocks like Alibaba Group Holding Ltd (NYSE:BABA) because these companies allow for much greater capital allocation. That’s why if we take a look at the most popular stocks among funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month, showing that their most popular picks and the ones that received the bulk of their capital were not actually their best picks. On the other hand, their top small-cap picks performed considerably better, outperforming the market by 95 basis points per month. This was confirmed through backtesting and in forward tests of our small-cap strategy since August 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of more than 123%, beating the broader market by over 66 percentage points through the end of April (see the details).
58.com Inc. (NYSE:WUBA) is a New York-listed company that operates the largest online marketplace in China. Its online marketplace allows local merchants and consumers to connect, share information and conduct business. The shares of 58.com have gained nearly 30% year-to-date despite riding the downtrend wave that has hit Chinese stocks since the beginning of June.
58.com and its arch-rival Ganji.com agreed to merge earlier this year amid accelerating consolidation in the Chinese technology sector. The two companies will continue to operate independently, whereas the CEOs will jointly manage the recently-joined company as co-CEOs. Analysts believe that this merger might generate savings in the companies’ advertising budgets, considering the fact that Ganji.com has been one of the closest competitors of 58.com. Reportedly, the management of 58.com revealed in a financial report last year its intentions to triple its advertising budget so as to compete with Ganji.com. In addition to that, some analysts have outlined that the merger can result in revenue synergies as well as the cost synergies, considering the companies’ strengths and areas of expertise are complementary. Moving on to the details of the transaction, the classified service 58.com acquired a 43.2% stake in Ganji.com by issuing 34 million shares and paying $412.2 million in cash. Finally, the merger has stopped the long-lasting fight between the two companies and created a leading Internet conglomerate on the Chinese market with a market capitalization of over $10 billion.
A little while ago, 58.com posted its financial results for the first quarter of this year. The classified service posted total revenues of $87.1 million, an increase of 80.5% year-over-year and exceeding the company’s guidance of $82.0 – $84.0 million. However, the company registered a loss for the quarter despite generating higher-than-expected revenues. Precisely, the company’s net loss came to $52.4 million, compared to a net income of $2.3 million reported a year ago. The heavy spending on advertising in the first quarter, when people return from the Chinese New Year holidays and refocus on their businesses, stands out as a prime factor behind the $52.4 million loss. Daniel Och’s OZ Management is one of the largest shareholders in 58.com Inc. (NYSE:WUBA), holding an equity stake of 1.52 million shares as of March 31.
Disclosure: None
