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Tiger Global Management Takes Big Stake in Ehi Car Services Ltd (ADR) (EHIC) As Chinese Company Preps for Expansion

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Chase Coleman‘s Tiger Global Management initiated a position in Ehi Car Services Ltd (ADR) (NYSE:EHIC) of some 9.4 million shares through its affiliated funds, according to a schedule 13D form filed this week. The stake represents a significant 21.5% of the company’s outstanding common shares.

Chase Coleman Tiger Global Management

With about $25 million in seed money from veteran investor Julian Robertson, Chase Coleman launched Tiger Global Management in 2001. The investment firm currently has $35 billion in assets under management. Coleman runs the investment firm. Tiger Global Management delivered phenomenal returns of 71% after fees in 2007. However, the financial crises led to a loss of 26% in 2008. According to the Bloomberg Markets Magazine, Tiger Global was the most profitable hedge fund in 2011, with total returns of 45% for the year. The market value of the investment firm’s public equity portfolio stood at $9.12 billion at the end of the first quarter, with the consumer discretionary and technology sectors contributing 45% and 34% to the aggregate holdings respectively.

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Chase Coleman And Feroz Dewan
Tiger Global Management LLC

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.

The $876.95 million China-based holding company, Ehi Car Services Ltd (ADR) (NYSE:EHIC), operates in two segments, car services and car rentals, and its ranking in those respective businesses is number one and number two in terms of market share in China. Tiger Global Management’s stake is part of Ehi Car Services Ltd (ADR) (NYSE:EHIC)’s plan to raise about $134 million by the issuance and sale of Class A common shares in two tranches. While Tiger Global Management’s new stake was part of the initial issuance, the additional issuance amounting to 10.9 million common shares is to follow within 60 days subject to the approval of Ehi Car Services Ltd (ADR) (NYSE:EHIC)’s shareholders. Along with Karthik Sarma‘s SRS Investment Management, Tiger Global Management has decided to invest $150 million in Ehi Car Services. The amount over the fresh issuance of $134 million worth of shares is to be furnished by the company’s existing shareholders, who will sell part of their stakes to the two funds mentioned above. Israel Englander‘s Millennium Management holds about 105,900 shares of Ehi Car Services Ltd (ADR) (NYSE:EHIC) valued at $1.01 million. Tiger Global Management has also entered into a lock-up agreement which dictates that it will not sell its shares of the company before November 21, save for some customary exceptions.

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