Billionaire Julian Robertson Takes Out Huge SPY Hedge, Grows Bearish on Transportation Stocks

Tiger Management is a New York-based hedge fund founded in 1980 by legendary investor and billionaire Julian Robertson. The original ‘Tiger Fund’, from which dozens of others have since spawned, has a public equity portfolio worth $423.32 million as of the end of the third quarter, well up from $310 million at the end of June, primarily due to a huge hedge against the SPY taken out by the fund during the third quarter. In this article we’ll take a look at Tiger Management’s top moves of the third quarter, including that bearish move.

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SPDR S&P 500 ETF Trust (NYSEARCA:SPY)

Tiger Management took out a large position of put options underlying 389,200 shares of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) in the third quarter. The stake had a total worth of $84.18 million at the end of the third quarter. While many funds hedge against some of their positions with put options, the size of this position says it was much more of a bearish bet against the broader markets than a simple hedge, as it accounted for nearly 20% of the value of the fund’s portfolio on September 30. The ETF is experiencing a massive inflow of money after the election of Donald Trump, as the markets touched new highs. Recent sessions added about $14 billion to the SPDR S&P 500 ETF Trust (NYSE:SPY), and the fund has gained 1.35% since Election Day, and over 7% since the start of the year. Shares did dip in early-November, though it’s unclear whether that would’ve been enough for Robertson to close on the position. Otherwise, it appears that the markets will have to fall back considerably, as they’ve jumped by over 5% since then.

Priceline Group Inc (NASDAQ:PCLN)

– Shares Owned by Tiger Management (as of September 30): 16,500

– Value of Tiger Management’s Holding (as of September 30): $24.28 million

The Tiger added 16,500 shares of Priceline Group Inc (NASDAQ:PCLN) to his fund’s portfolio in the third quarter, valued at $24.28 million. The company reported third quarter EPS of $31.18, better than the consensus estimate of $29.32, while revenue in the quarter came in at $3.69 billion, versus the consensus estimate of $3.62 billion. The Connecticut-based online travel agent sees fourth quarter EPS of between $12.20 and $12.80 a share, versus the consensus of $12.93. Earlier this year, Priceline’s CEO resigned after an internal investigation found him guilty of having an ‘inappropriate’ relationship with a company employee. A total of 85 hedge funds tracked by Insider Monkey were bullish on Priceline Group Inc (NASDAQ:PCLN) as of the end of the second quarter.

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On the next page, we’ll discuss the rest of Julian Robertson’s top Q3 moves.

Bristol-Myers Squibb Co (NYSE:BMY)

– Shares Owned by Tiger Management (as of September 30): 400,800

– Value of Tiger Management’s Holding (as of September 30): $21.61 million

Bristol-Myers Squibb Co (NYSE:BMY) was another new addition to Tiger Management’s portfolio during the third quarter, as the fund acquired 400,800 shares of the company worth $21.61 million at the end of the third quarter. The stock has lost over 17% in value year-to-date, so Tiger Management appears to like the entry point. Financial research firm Jefferies recently upped its price target to $58 from $54 on the medical company, which recently got FDA approval for its head and neck cancer drug, Opdivo. Bristol-Myers earned $0.77 a share on $4.83 billion in revenue in the third quarter, above the forecasts of $0.65 in EPS on $4.79 billion in revenue. As of the end of the third quarter, Jim Simons’ Renaissance Technologies owns 4.74 million shares of Bristol-Myers Squibb Co (NYSE:BMY).

 

Delta Air Lines, Inc. (NYSE:DAL)

– Shares Owned by Tiger Management (as of September 30): 103,375

– Value of Tiger Management’s Holding (as of September 30): $4.16 million

Tiger Management sold off 82% of its stake in Delta Air Lines, Inc. (NYSE:DAL) in the third quarter, ending the period with just 103,375 shares of the company which had a total value of $4.16 million. That move was in contrast to fellow legendary investor Warren Buffett‘s, whose holding company Berkshire Hathaway recently revealed a new position in the company of over 6.3 million shares and was bullish towards other airlines as well. The Atlanta-based airliner recently announced yet another pay raise for its employees and despite a slowdown in U.S business, Delta remains strong. The company’s profit for the first nine months of 2016 was up by 6% year-over-year. Alex Snow’s Lansdowne Partners owns 26.76 million shares of Delta Air Lines, Inc. (NYSE:DAL) as of September 30.

  

AMERCO (NASDAQ:UHAL)

Tiger Management dumped all 39,962 AMERCO (NASDAQ:UHAL) shares that it owned on June 30 during the third quarter, leaving no stake in the Nevada-based do-it-yourself moving and storage operator. In its fiscal 2017 second quarter, AMERCO experienced a 3.7% increase in revenue from the year-ago period, while adjusted earnings declined by about 12%, as the company earned $8.22 per share on $998.9 million in revenue. The stock is down by over 11% so far this year. 23 funds tracked by Insider Monkey were bullish on AMERCO (NASDAQ:UHAL) at the end of the June quarter.

Disclosure: None