Tiger Cub Philippe Laffont’s New Stock Picks Include Netflix

Coatue bought 1.3 million shares of eBay Inc (NASDAQ:EBAY) in the fourth quarter. eBay’s payments division, which includes PayPal, has been leading the company’s overall growth though marketplaces have also been performing well. Overall, operating income was up 22% last year compared to 2011 (other sources of income were abnormally high in that year, causing net income to decrease as normal conditions resumed in 2012). Some growth is already priced into eBay, given the fact that it is valued at 17 times consensus earnings for 2014, but it might still be worth considering.

The 13F disclosed a new position of 7.5 million shares in Groupon Inc (NASDAQ:GRPN). The daily deals company is down 68% in the last year even after a rebound following the exit of its CEO. 13% of outstanding Groupon shares are held short, and the company continues to struggle with profitability; in addition, many bears argue that more merchants are turning down Groupon’s business opportunity. The sell-side expects 30 cents of EPS in 2014, implying a forward earnings multiple of 19, but we have too many concerns about the business to recommend buying the stock.

A number of Coatue’s new picks, including Groupon, Netflix, and Charter, seem too speculative for an investor to buy on the basis of anything but high growth expectations. As a result, we’d recommend avoiding the stocks and possibly taking a look at shorting Groupon now that the stock has climbed out of its slump (Netflix, we think, is too volatile for a short position). eBay also carries high earnings multiples but that company’s earnings growth seems to have better reasoning behind it, and CBS has a number of factors- including the REIT conversion- which make it worth a closer look in our view.

Disclosure: I own no shares of any stocks mentioned in this article.