Virgin Media Inc. (VMED): Billionaire Julian Robertson’s Protégé Has Quite the Mega-Hedge Fund

Blue Ridge Capital is a $7 billion fund run by a key Julian Robertson protégé, John Griffin.  The fund has made an average return of 17.83% over the past three years on investments focused on the technology and services sectors.  With that in mind, it’s not surprising that Griffin has added stocks from those sectors to his portfolio according to his latest 13F filing with the SEC.  Let’s take a look at five of those new positions and whether they will contribute to Griffin’s success at picking winners.

John-Griffin2-e1353509650950

The first is Realogy Holdings Corp (NYSE:RLGY), in which Griffin bought 5.2 million shares for a market value of $220,290,000. Realogy offers real-estate services such as relocation, title and settlement services, real-estate franchise services and owns real-estate brokerages such as Century 21, Caldwell Banker and Southeby’s International .  Since going public last October at $27 per share, the stock has gained another $23 in price. On the downside, the percentage of sales devoted to the cost of goods sold rose 2% to 51% in the most recent quarter despite a 15% increase in revenue.  However, the longer-term outlook for Realogy remains bullish, and analysts recommend a buy for the stock as it continues to capitalize on gains in the housing market.

Virgin Media Inc. (NASDAQ:VMED), another addition to the Blue Ridge Capital equity portfolio, was acquired by Liberty Global for $47.87 per share earlier this year, a 25% gain over the closing price before the deal was announced. Due to the fact that Blue Ridge added Virgin Media Inc. (NASDAQ:VMED) to its portfolio during the fourth quarter of 2012 when the stock was still trading below $40 per share, it’s safe to assume that Griffin realized a nice profit off his 4.6 million shares. Since trading to a new high of $47.70, the stock is under pressure from profit taking.  Analysts maintain that Virgin Media Inc. (NASDAQ:VMED) is no match for British Sky Broadcasting, which dominates the pay TV and fixed-line telephone markets. However, Virgin Media Inc. (NASDAQ:VMED) is priced much more attractively than Sky, and its debt-to-equity ratio of 1.9—versus 3.7 for Sky—makes Virgin the better buy.

The most notable thing about the next new addition to Blue Ridge’s equity portfolio is that there exist only a handful of businesses that are able do the same thing.  IHS Inc. (NYSE:IHS) provides “vital” technical information to capital-intensive companies.  This is, apparently, a difficult sector to enter and this barrier to entry is probably why IHS trades as well as it does despite being priced very expensive to the rest of this sector.  But revenue growth is up to $1.5 billion for 2012 from $1.3 billion in 2011 and sales devoted to COGS is down from 42% to 40%, which is why the stock has a buy recommendation from most analysts with an upside trading range of $112.50 to $114.00 a pop.

Sally Beauty Holdings, Inc. (NYSE:SBH) enjoys a market that has limited competitors offering the same professional grade beauty supplies to non-professional consumers.  Blue Ridge Capital picked up 4.765 million shares of Sally Beauty last quarter and has already realized a 26% profit on the stock since the first of the year. The stock appreciated following a bullish earnings report—revenue was up 4.7% and EPS was up $0.03—but it’s starting to come down off its high of $27.87 on profit taking, presumably speaking.

Finally, there is Workday Inc (NYSE:WDAY), which offers human capital management such as payroll services, financial management and analytics applications. Workday has had a nice run–up over the past month, but there are worrisome signs of fatigue in the stock both technically and from a fundamental standpoint.  Although revenue has been improving, analysts are concerned that the sluggish rate of revenue gains points to a deceleration in growth. Equally as worrisome, sales devoted to COGS has deteriorated from -$80 million to  -$119 million. Workday also faces stiff competition from SAP AG (ADR) (NYSE:SAP) and others, all of whom are better positioned for the larger client than Workday is marketing itself toward.

With the exception of Workday, the new additions to Blue Ridge Capital’s equity portfolio should contribute to the continued growth in the fund. These recent picks offer few surprises to the overall strategy of the fund to stick with the technology and services sectors. Our guess is the Blue Ridge will increase their position in Realogy and HIS, as these stocks have the best potential for additional gains.  Others like Workday and Sally Beauty have probably had their best days behind them for the near future.

Disclosure: none

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!