Billionaire Chase Coleman Is Betting Big on Industry Disruptors from Tech Sector

Technology is still a hot sector as we can see from Billionaire Tiger Cub Chase Coleman‘s equity portfolio, which has just been disclosed in his firm’s 13F filing for the third quarter. Tiger Global Management held around $8.12 billion in shares of U.S publicly-traded companies, with the top three holdings represented by tech companies and amassing over 60% of the total value. Chase Coleman is one of the best performing Tiger Cubs, which is why we follow his moves as part of our investment strategy.

Chase Coleman Tiger Global Management

Through extensive research, we have determined that retail investors can generate substantial profits from piggybacking larger money managers. Hedge funds and other institutional investors focus on the long-term, which offsets the delays in their filings. Our focus is the small-caps that over 700 funds from our database are collectively bullish on and this approach has helped us generate returns of around 102% since August 2012, outperforming the broader market by around 53 percentage points (see more details here).

Chase Coleman
Chase Coleman
Tiger Global Management LLC

With this in mind, let’s take a look at Tiger Global Management’s top five holdings, starting from the bottom. On the fifth spot is Restoration Hardware Holdings Inc (NYSE:RH), in which the fund held 3.19 million shares as of the end of September; the value of the stake amounting to $297.98 million and representing 3.67% of Tiger Global’s equity portfolio. Restoration Hardware is a $3.7 billion home furnishings retailer, whose stock has gained nearly 11% since the beginning of 2015. Though it has lost over 10% in the last three months, being just ahead of the holiday season, Restoration Hardware Holdings Inc (NYSE:RH) could be a good stock to hold. Analysts are also bullish on Restoration Hardware, with a number of them upgrading the stock to ‘Buy’ or ‘Outperform’ in the last couple of weeks. Ken Griffin’s Citadel Advisors is another shareholder of Restoration Hardware Holdings Inc (NYSE:RH), which added 604,021 shares to its stake in the third quarter, reporting ownership of 1.01 million shares as of the end of September.

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In FleetCor Technologies, Inc. (NYSE:FLT), Coleman’s fund reported a $628.92 million stake that contains 4.57 million shares. FleetCor Technologies, Inc. (NYSE:FLT)’s stock slid by 11% in the third quarter, but the investor kept his bullish thesis and took the opportunity to acquire 1.47 million shares, raising the stake by 47% on the quarter. So far, FleetCor’s shares are flat in year-to-date terms and sport a P/E ratio of 32.7, which is above the median for the S&P 500, but below the industry average. FleetCor provides fuel cards and other payment solutions for oil companies and retailers and should benefit from the growth in the payment business as more and more customers switch to non-cash methods of payment. Another Tiger Cub, Stephen Mandel of Lone Pine Capital, is also fond of FleetCor Technologies, Inc. (NYSE:FLT), as Lone Pine reported ownership of 6.43 million shares in its 13F filing for the third quarter.

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On the next page, we are going to take a look at Chase Coleman’s top three tech bets, which include Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and JD.Com Inc (ADR) (NASDAQ:JD).

JD.Com Inc (ADR) (NASDAQ:JD) was Coleman’s third-largest tech holding heading into the fourth quarter. The stock tanked by over 23% between July and September, amid concerns regarding the Chinese economy, and Tiger Global unloaded 12.65 million shares during this time, remaining with 57.53 million shares worth $1.50 billion (the position amassed 18.50% of the fund’s equity portfolio). Since the end of the third quarter, JD’s stock has slightly rebounded, gaining around 10% amid strong “Singles Day” sales figures and support voiced by short-seller Jim Chanos of Kynikos, who suggested JD.Com Inc (ADR) (NASDAQ:JD)’s stock as a long alternative to Alibaba Group Holding Ltd (NYSE:BABA). The stock gained almost 50% in the first six months of 2015, and despite the reversal of that momentum since, it is still 16% in the green year-to-date. Investors are betting on JD.Com Inc (ADR) (NASDAQ:JD) based on the belief that the stock’s drop is caused by short-term factors, while over the long-run it will be able to provide them with significant gains. Lei Zhang’s Hillhouse Capital Management is one of the largest shareholders of JD.Com, owning 136.61 million shares as of the end of September.

Amid an 18% growth of the stock between July and September, Tiger Global opted to acquire 2.45 million shares of Amazon.com, Inc. (NASDAQ:AMZN) and, in this way, boosted its stake in the company more than three-fold to 3.19 million shares worth $1.63 billion. It was the right call, since the stock has advanced by another 30% since the end of September, as Amazon.com, Inc. (NASDAQ:AMZN) pleased investors with strong financial results for the latest quarter. Jeff Bezos has done a great job at positioning the company for long-term growth and the results of his work are starting to show, as Amazon’s stock has already more than doubled since the beginning of the year. In this way, investors are becoming more and more bullish on Amazon. Aside from Coleman, Andreas Halvorsen also raised his exposure to Amazon.com, Inc. (NASDAQ:AMZN) in the last quarter, with Viking Global reporting a holding of 3.02 million shares as of the end of September, up by 735,203 shares on the quarter.

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Finally, Coleman’s top bet is Netflix, Inc. (NASDAQ:NFLX), in which Tiger Global disclosed an $1.86 billion stake containing almost 17.20 million shares. Netflix, Inc. (NASDAQ:NFLX) is another company that traded short-term momentum for long-term profits, as it did not focus on beating earnings estimates each quarter, contrary to so many other companies, but rather, focused on developing its business. With customers switching from traditional cable to online services, Netflix should reward its shareholders over the years ahead. The company’s original content has also been well received by viewers, which should support the company’s focus on more original movies and shows, rather than purchasing the rights to other cable networks’ and movie studios’ content. Phillipe Laffont, who leads Coatue Management, seems to share Coleman’s opinion on Netflix, Inc. (NASDAQ:NFLX), as Coatue added 3.95 million shares to its stake in the third quarter, reporting ownership of 5.96 million shares in its latest 13F filing.

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Disclosure: None