Chase Coleman Stock Portfolio: 10 Top Stock Picks

Published on December 7, 2023 at 1:03 pm by Usman Kabir in Hedge Funds, News

In this article, we discuss Chase Coleman and his top 10 stock picks. If you want to read about some more stocks in the Coleman portfolio, go directly to Chase Coleman Stock Portfolio: 5 Top Stock Picks.

Many hedge fund managers on Wall Street owe their success to Julian Robertson, the billionaire chief of Tiger Management who averaged returns of more than 26% over a two decade period starting in 1980. One of these managers is Chase Coleman of Tiger Global Management, a New York-based investment firm with an equity portfolio worth more than $13.5 billion at the end of the third quarter of 2023, featuring top names like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).

Coleman, one of the many Tiger Cubs, began his investing career in 1997 under the mentorship of Robertson. Coleman, who was close to Robertson and his son Spencer, was given $25 million to start his own investment firm in 2000, the year Robertson closed his own fund. Thirty other investors at Tiger Management were also given seed money, many of whom are now successful hedge fund managers. In the first two decades of formation, Coleman’s fund returned more than 21% to investors annually on average.

In 2022, however, there was a broad selloff in the tech sector, in which the majority of equity holdings of the hedge fund were consolidated. Coleman, despite a more than 50% drop in returns, refused to buckle under pressure, instead doubling down on his bets in the tech space. He has continued to follow this strategy, with the top ten holdings in his fund, concentrated in the tech space, accounting for more than 71% of the entire portfolio at the end of September. Between June and September, the value of his equity portfolio increased by $1.6 billion.

Coleman is rather famous for staying away from the spotlight. He does not give interviews to the press and rarely speaks at public conferences, instead focusing on his primary responsibilities to his investment firm. He manages a small team at his firm comprising around a hundred individuals, in stark contrast to other elite hedge funds which employ thousands of people. His achievements are rather extraordinary. He likes to invest in small caps and tech stocks with a long-term focus on fundamentals.

Conservative estimates suggest that investors who backed him at the start of his hedge fund career have seen their investments increase by more than 40 times in size. In the same time period, the S&P 500 has increased in size only five times. In 2020, his fund earned investors more than $10 billion, more than any other hedge fund in the world that year. Per finance publication Institutional Investor, in a letter to clients in 2021, Coleman highlighted how his investment strategy was simple; buy the best and short the rest.

He wrote that his fund sought to identify high-quality businesses levered to the most important secular growth trends while shorting poorly positioned companies on the wrong side of change. Coleman pointed out that his investment strategy was not very well-received, but those that had shown faith in him were rewarded in kind. He credited his success to sound long-term investments in big companies and effective shorting of stocks that were doomed to fail. In his letter, signed by his management, Coleman also said the following:

“We are grateful to have begun our investment careers at a time when the internet era was just beginning. Inexperience may have been an asset when it came to imagining what a new internet-connected world could look like, and our research indicated that market leaders could achieve very high returns on capital. Over the course of our careers, we have seen successive generations of technology improvements lay the groundwork for future change, and we believe this trend is accelerating. With a high degree of certainty, the future will see machine intelligence automate larger swathes of decision-making increasing efficiency and further embedding digital systems in our daily lives.”

Our Methodology

These were picked from the investment portfolio of Tiger Global Management at the end of the third quarter of 2023. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2023 was used to quantify the popularity of each stock in the hedge fund universe.

Chase Coleman Stock Portfolio: Top Stock Picks

10. ServiceNow, Inc. (NYSE:NOW)

Number of Hedge Fund Holders: 93

ServiceNow, Inc. (NYSE:NOW) provides enterprise cloud computing solutions that define, structure, consolidate, manage, and automate services for enterprises worldwide. Latest data shows that Tiger Global Management owned 594,455 shares of ServiceNow, Inc. (NYSE:NOW) at the end of the third quarter of 2023 worth $332 million, representing 2.44% of the portfolio.

On November 2, investment advisory Argus maintained a Buy rating on ServiceNow, Inc. (NYSE:NOW) stock and raised the price target to $675 from $650, noting that the firm was differentiating itself by investing in research and development.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in ServiceNow, Inc. (NYSE:NOW) with 1.4 million shares worth more than $831 million.

Just like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), ServiceNow, Inc. (NYSE:NOW) is one of the top stocks in the portfolio of Chase Coleman.

In its Q3 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and ServiceNow, Inc. (NYSE:NOW) was one of them. Here is what the fund said:

“Despite near-term macro uncertainty, it’s important to frame that we find ourselves in the early innings of both the AI investment cycle and overall cloud penetration. We estimate cloud penetration to be between 25% and 30% versus the likely 70% to 75% level over time, if not even higher. AI deployments are literally just getting off the ground.Infrastructure and development platforms for securely storing and curating data, training and fine-tuning large-language and other AI models, and developing and delivering AI applications. Beneficiaries include Microsoft Azure and Amazon Web Services. Integration of generative AI capabilities, such as AI agents and copilots, directly into existing product offerings and customer workflows. Software vendors capitalizing on this opportunity includes ServiceNow, Inc.“

9. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 175

NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Latest data shows that Tiger Global Management owned 1.1 million shares of NVIDIA Corporation (NASDAQ:NVDA) at the end of the third quarter of 2023 worth $483 million, representing 3.56% of the portfolio.

On November 13, investment advisory Bank of America maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) stock with a price target of $650, appreciating the investments of the firm in the artificial intelligence space.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in NVIDIA Corporation (NASDAQ:NVDA) with 20 million shares worth more than $8.8 billion.

In its Q3 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:

“At the portfolio level, the positive fundamental trends we noticed in the second quarter continued into the third quarter as well – many of our companies are reporting stability or slight improvement in business trends. Weighted average 2023 revenue growth expectations for the portfolio were up 3.8% during the third quarter or up 0.8% if we exclude NVIDIA. We wrote at length about NVIDIA earlier this year, but it is worth mentioning that the company has continued to exceed its own projections and the Street’s most optimistic expectations. After raising its revenue and EPS guidance for 2023 by 40% and 69%, respectively, following its last quarter, NVIDIA increased it further by 26% and 35%, respectively, after reporting the most recent one. Consensus expectations now call for revenues to grow 94% this year, while earnings per share are expected to increase by 192%. You may have seen these kinds of growth rates before, but we doubt you saw them from a company generating $50 billion in revenues. The skeptics who continue to question and doubt the accelerating demand for Generative artificial intelligence forgot to tell NVIDIA about it. But we digress…back to the portfolio…profit expectations have risen even faster than revenues and were up 11% during the third quarter (or up 7.8% ex-NVIDIA) with margin expectations up 149bps (107bps ex-NVIDIA). So, broadly speaking, our companies are seeing improvement in overall business trends, which flow through to their bottom lines, driving higher margins. We are also starting to see the benefits of leaner cost structures and more disciplined capital allocation compared to two or three years ago when capital was both cheaper and more readily available.”

8. Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 87

Eli Lilly and Company (NYSE:LLY) develops and markets human pharmaceuticals. Latest data shows that Tiger Global Management owned 919,100 shares in Eli Lilly and Company (NYSE:LLY) at the end of the third quarter of 2023 worth $493 million, representing 3.63% of the portfolio.

On November 8, investment advisory Deutsche Bank initiated coverage of Eli Lilly and Company (NYSE:LLY) stock with a Hold rating and a price target of $535.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Eli Lilly and Company (NYSE:LLY) with 3.2 million shares worth more than $1.7 billion.

In its Q3 2023 investor letter, RiverPark Advisors highlighted a few stocks and Eli Lilly and Company (NYSE:LLY) was one of them. Here is what the fund said:

“Eli Lilly and Company (NYSE:LLY): LLY discovers, develops, manufactures, and markets pharmaceuticals. The company manufactures and distributes products through facilities in the United States and seven other countries and sells into 110 countries. The company has a broad and deep portfolio of products including a focus on diabetes, oncology, immunology, and neuroscience. More recently, LLY’s obesity drug Mounjaro, has delivered revenue growth acceleration, and investors are optimistic that the company’s Alzheimer drug, currently in trials, will add to that growth in the future.

LLY has a stable portfolio of franchise products that enables it to invest heavily in its product pipeline. We believe that this combination of franchise and growth products will drive high teens revenue growth and a four-fold increase in free cash flow in the next five years. We initiated a small position in August.”

7. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 278

Amazon.com, Inc. (NASDAQ:AMZN) is a diversified technology firm with core interests in ecommerce. Securities filings show that Tiger Global Management owned over 3.9 million shares of Amazon.com, Inc. (NASDAQ:AMZN) at the end of September 2023 worth $500 million, representing 3.68% of the portfolio.

On November 10, investment advisory Tigress Financial maintained a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock and raised the price target to $210 from $204. Analyst Ivan Feinseth issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 34 million shares worth more than $4.3 billion.

In its Q3 2023 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:

“Amazon continues to showcase it’s place as one of the most competitively advantaged companies in the world. The company has made significant progress in managing costs and better leveraging existing capacity, driving a strong recovery in its profitability. We think there’s additional room for improvement.

AWS growth seems to be stabilizing even while management continues to work with clients to optimize their infrastructure spend. Roughly 90% of global IT spending remains on premise. We believe this will eventually flip, with most IT spending ultimately moving to the cloud over time. We think AWS will be a significant beneficiary of this transition.

Further, our investment case on company profitability driven by AWS and advertising continues to unfold, delivering nearly $8 billion in free cash flow over the trailing twelve months and a net margin of 5%. We expect both to move higher with the mix shift of more profitable businesses growing fastest continuing to take effect.

At Amazon’s current price, we believe the company is well positioned to deliver a mid-teens or higher total shareholder return for our clients over the next five plus years without a Herculean effort from the business. It simply needs to continue executing on current businesses and growing into the capacity it built during and immediately after the pandemic.”

6. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 62

Sea Limited (NYSE:SE) is a Singapore-based technology company with interests in a wide array of businesses that include digital entertainment, ecommerce, and fintech. Regulatory filings show that Tiger Global Management owned over 11.7 million shares of Sea Limited (NYSE:SE) at the end of September 2023 worth $514 million, representing 3.79% of the portfolio.

On November 16, investment advisory Barclays maintained an Overweight rating on Sea Limited (NYSE:SE) stock and lowered the price target to $59 from $64, noting the selloff in the shares post quarterly results was unwarranted.

At the end of the second quarter of 2023, 62 hedge funds in the database of Insider Monkey held stakes worth $1.9 billion in Sea Limited (NYSE:SE), compared to 65 the preceding quarter worth $2.8 billion.

Along with Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Sea Limited (NYSE:SE) is one of the top stocks in the portfolio of Chase Coleman.

In its Q3 2023 investor letter, SaltLight Capital, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:

“Sea Limited (NYSE:SE) is a much younger company, with its e-commerce marketplace starting in Southeast Asia in 2015. The share price on the journey has been as volatile as MELI’s. Similarly, SEA is weathering several doubts about new waves of foreign competition, business economics and the business model. For long-term investors looking for extraordinary returns, this is the natural state in the ‘uncertainty’ phase.”

Click to continue reading and see Chase Coleman Stock Portfolio: 5 Top Stock Picks.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

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Click to continue reading…

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