In this article, we will discuss the top 5 stock picks of Julian Robertson’s Tiger Management. If you want to read our discussion on Robertson’s illustrious career and legacy, go directly to the 10 Stock Picks of Julian Robertson’s Tiger Management.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
Julian Robertson’s Tiger Management’s Holdings: $11,816,000
Percentage of Julian Robertson’s Tiger Management’s Portfolio: 5.2%
QUALCOMM Incorporated (NASDAQ:QCOM) is a California-based semiconductor company.
On July 28, T. Michael Walkley at Canaccord gave QUALCOMM Incorporated (NASDAQ:QCOM) stock a Buy rating with a target price of $225. The analyst highlighted that the company is amongst the market leaders in the rollout of 5G technology, and it will experience a significant gain of market share with leading smartphone original equipment manufacturers (OEMs).
QUALCOMM Incorporated (NASDAQ:QCOM) offers long-term growth through its exposure to the Internet of Things (IoT) theme and the automotive industry. However, the stock is undergoing multiple compression due to fears of an upcoming recession.
ClearBridge Investments discussed its outlook on QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2021 investor letter. Here’s what the firm said:
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
4. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 38
Julian Robertson’s Tiger Management’s Holdings: $12,895,000
Percentage of Julian Robertson’s Tiger Management’s Portfolio: 5.68%
AutoZone, Inc. (NYSE:AZO) is a Tennessee-based retailer of automotive parts and accessories.
Julian Robertson’s Tiger Management initiated a position in AutoZone, Inc. (NYSE:AZO) during Q2 2022. The hedge fund bought 6,000 shares at an average quarterly share price of $2056.6.
Experts believe that under the current economic uncertainty, AutoZone, Inc. (NYSE:AZO) stock provides a defensive position to investors due to the nature of its business. The sale of auto parts is non-discretionary, and its demand is relatively inelastic. This would aid AutoZone, Inc. (NYSE:AZO) in passing on the burden of higher costs to the end customer. Furthermore, AutoZone, Inc. (NYSE:AZO) will continue to gain market share from its highly fragmented do-it-for-me (DIFM) competitors.
Here’s what Weitz Investment Management said about AutoZone, Inc. (NYSE:AZO) in its Q2 2022 investor letter:
“Given a nearly fully invested portfolio, we elected to trim or sell some holdings in favor of increasing our stakes in several more compelling opportunities. We continued trimming Markel on strength and sold our remaining AutoZone (NYSE:AZO) shares during the quarter. Over our roughly 18 months of ownership, AutoZone was a strong contributor to results, and we would gladly own this business again. At current prices, however, we believe its defensive characteristics are well-appreciated.”
3. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 61
Julian Robertson’s Tiger Management’s Holdings: $26,137,000
Percentage of Julian Robertson’s Tiger Management’s Portfolio: 11.51%
Blackstone Inc. (NYSE:BX) is a New York-based investment management company with an asset under management (AUM) of over $940 billion as of Q2 2022.
On August 12, Brian Bedell at Deutsche Bank increased the target price for Blackstone Inc. (NYSE:BX) from $147 to $153 and reiterated a Buy rating on the stock following changes in EPS estimates. The analyst revised his financial model to incorporate the impact of changes in macroeconomic assumptions and the recovery in the equity markets since the lows of mid-June 2022. Blackstone Inc. (NYSE:BX) is expected to be a beneficiary of the strong rebound in the stocks, given its diverse portfolio.
Aristotle Capital Management shared its stance on Blackstone Inc. (NYSE:BX) in its Q1 2022 investor letter. Here’s what it said:
“Founded by its current CEO Stephen Schwarzman and Pete Peterson in 1985, Blackstone is one of the largest alternative asset managers in the world, with more than $880 billion of assets under management (AUM). The firm creates and manages investment vehicles that span asset classes globally and serve both institutional clients as well as high-net-worth individuals. Its core business segments include Real Estate (34% of fee-earning AUM), Credit and Insurance (31%), Private Equity (24%), and Hedge Fund Solutions (11%).
Blackstone has leveraged its broad product portfolio and enviable investment performance to not only raise substantial amounts of capital but also maintain its reputation as a one-stop shop for investors looking to gain exposure to alternative assets. In contrast to traditional asset managers that rely on investor inaction to keep redemption rates low, the products offered by alternative asset managers typically have lockup periods that prevent redemptions for a substantial amount of time (often 10+ years).
High-Quality Business
Some of the quality characteristics we have identified for Blackstone include:
-Reputable management team that has produced an admirable track record of investment performance and demonstrated its ability to raise capital (the firm is now 9x larger since its 2007 IPO);
-Stable client base and sticky asset base with 73% of its capital locked up for over 10 years; and
-Significant scale and strong brand that provides a myriad of advantages, including for distribution and new product launches.
Attractive Valuation
Based on our estimates of normalized earnings, we believe shares of Blackstone are offered at a discount relative to our estimate of intrinsic value. It is our view that current valuation does not appropriately reflect our estimated future levels of fee-based revenue.
Compelling Catalysts
Catalysts we have identified for Blackstone, which we believe will cause its stock price to appreciate over our three- to five- year investment horizon, include:
-Increased fee-based revenue as dry powder committed capital that has yet to be invested is deployed. As of the fourth quarter of 2021, there was a total of $136 billion in dry powder across the firm;
-Given its scale and sustained investment prowess, Blackstone is uniquely positioned to benefit from the secular shift in investor allocation away from traditional managers and toward less liquid and higher expected return strategies in the alternative asset management sector; and
-Further penetration in the retail and private wealth channel, a segment of investors that has historically been excluded from participating in alternative assets. Blackstone has a first-mover advantage in providing institutional-quality products across its expanding distribution teams that focus on financial advisors.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Julian Robertson’s Tiger Management’s Holdings: $26,736,000
Percentage of Julian Robertson’s Tiger Management’s Portfolio: 11.78%
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based diversified technology conglomerate.
Experts believe that Microsoft Corporation (NASDAQ:MSFT) can grow its top line and free cash flows (FCF) by an average in the mid-teens percentage due to the upside offered by the Azure cloud services and Office 365 Commercial. The biggest publicly listed company in the world is expected to experience secular growth in the cloud computing industry as it is set to compound annually at an average rate of 14.8% from 2022 to 2030. This will be beneficial for Microsoft Corporation (NASDAQ:MSFT) because 40% of the company’s revenues are generated by the Microsoft Intelligent Cloud segment.
Here’s what Baron Funds said about Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter:
“Shares of mega-cap software company Microsoft Corporation (NASDAQ:MSFT) pulled back with the broader software sector. The company posted another solid quarter, highlighted by total revenues increasing 20% and Microsoft Cloud revenues, now 45% of total revenues, growing 32%. These results were driven, in large part, by strong demand for large Azure contracts. We believe Microsoft can compound revenue in the low double digits for the next three years, underpinned by its expansion in its total addressable market and market share gains.”
Microsoft Corporation (NASDAQ:MSFT) was held by 259 hedge funds at the end of Q2 2022.
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Julian Robertson’s Tiger Management’s Holdings: $34,365,000
Percentage of Julian Robertson’s Tiger Management’s Portfolio: 15.14%
Alphabet Inc. (NASDAQ:GOOG) is a California-based diversified technology company and parent company of leading technology brands like Google, Waymo, and YouTube.
The stock price of the tech giant has doubled in the last two years. However, Alphabet Inc. (NASDAQ:GOOG) continues to offer significant upside to investors as the business is expected to see growth in its revenue from the advertising segment. Alphabet Inc.’s (NASDAQ:GOOG) advertising segment contributed $209 billion to the top line in 2021 through Search and YouTube. Experts believe Alphabet Inc. (NASDAQ:GOOG) will achieve a total top line of $368 billion by 2026. This would be equivalent to 42% of the total size of the online adverting market, according to Statista.
Alphabet Inc. (NASDAQ:GOOG) was mentioned in the Q2 2022 investor letter of Mayar Capital. Here’s what the firm said:
“Our technology businesses enjoyed a strong year of operating performance – from Google. Google saw revenue growth of over 40% in the year, with operating profits growing above 90%; YouTube ended the year with higher viewership than Netflix – without the content costs. With its dominant position in online advertising, we continue to monitor regulatory risks for this business.”
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