Is Billionaire Julian Robertson Struggling With Large-Cap Stocks?

Julian Robertson is one of the most scrutinized investors on Wall Street, even though he closed his Tiger Management fund back in 2000. Even though Tiger Management is currently responsible for Robertson’s own wealth, it still makes headlines from time to time and its returns are closely watched. For example, in 2008 Robertson scored a 150% return on his $200 million personal account, according to Forbes. We at Insider Monkey also backtested the performance of Robertson’s equity portfolio as reported in Tiger Management’s 13F filings. According to our calculations, between 2009 and 2012, the fund’s top five large-cap positions (in companies worth over $20 billion) generated an average gain of 1.63% per month, underperforming the S&P 500, which appreciated by a monthly 1.72% in the same period.

At the end of September, Tiger Management’s 13F portfolio was worth $423.32 million, according to its latest filing, and the fund was mainly invested in Technology, Healthcare and Financial stocks. In this article, we are going to take a look at five of Julian Robertson’s holdings in large-cap stocks. The companies in question are Celgene Corporation (NASDAQ:CELG), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), and Priceline Group Inc (NASDAQ:PCLN). 

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs (see more details).

Let’s start with Celgene Corporation (NASDAQ:CELG), in which Robertson’s fund held 368,940 shares worth $38.57 million at the end of September. Robertson was one of the nine billionaires whose funds we track that were bullish on Celgene heading into the fourth quarter. Overall, 67 funds in our database held roughly $2.57 billion worth of Celgene’s stock, compared to 68 funds with stakes worth $1.94 billion a quarter earlier. Robertson initiated a stake in Celgene during the first quarter of 2016 and has seen the stock gain 4% between April and September, although year-to-date the stock is close to flat. One of Celgene Corporation (NASDAQ:CELG)’s most promising candidates is GED-0301, for the treatment of Crohn’s disease. In October, the company announced that its Phase 1b study of GED-0301 showed promising results, with a clinical response rate of 67% and a 48% remission rate. Earlier this month, Celgene acquired Acetylon Pharmaceuticals, a Boston-based biopharmaceutical company that is engaged in the development of small molecule histone deacetylase (HDAC) inhibitors; one of its lead product candidates is developed for the treatment of blood cancer and solid tumors.

After Celgene, which represents Tiger Management’s largest long position as of the end of September, let’s move on to some of the fund’s picks from the tech sector. Microsoft Corporation (NASDAQ:MSFT) was Tiger Management’s second-largest long position, being worth $26.40 million and containing 458,300 shares at the end of September, the latter being up by 13% over the quarter. In Microsoft, Tiger initiated a stake between April and June and saw the stock appreciate by nearly 13% during the third quarter. Moreover, since the beginning of the second-half of 2016, the stock is up by 22% and currently has a dividend yield of 2.35%. Earlier this month, Microsoft completed the acquisition of LinkedIn in a $26.2 billion deal that was the largest in its history. Moreover, according to recent reports, Microsoft Corporation (NASDAQ:MSFT) is getting more involved in the hot Internet of Things space, including plans to add its virtual assistant Cortana to home environment devices, where Alphabet, Amazon, and others also have a presence. Overall, 126 funds in our database held shares of Microsoft Corporation (NASDAQ:MSFT) with a total value of $18.14 billion at the end of September, down from 131 funds and $18.82 billion, respectively, a quarter earlier.

Alphabet Inc (NASDAQ:GOOG) is one of Tiger Management’s longer-term picks, as the fund initiated a stake back in 2014. In the third quarter of the current year, the fund trimmed its position in Alphabet by 14% to 33,598 class C shares worth $26.12 million. Separately, the fund held 2,396 class A shares of the company. The stock of one of the best tech companies has gained over 7% since the beginning of 2016, as Alphabet has posted better-than-expected results in the last two quarters. With ad revenue still amassing the lion’s share of Alphabet’s top-line, the company is looking for ways to generate revenue from its other units amid concerns that the current model might not prove lucrative in the future. In this way, Alphabet Inc (NASDAQ:GOOG) is making progress in voice interaction and the Internet of Things, having recently launched Google Home, a standalone device that can be controlled by voice and answer questions, similar to Amazon’s Echo. Moreover, Alphabet recently announced that its self-driving car project will be included in a separate unit called Waymo. This was received by the public as a signal that Alphabet won’t focus on the objective of building a fully-autonomous car, but will try to incorporate the existing technology into vehicles built by other manufacturers, and in this way it might be capable of generating revenues sooner than expected. At the end of September, 134 funds from within our database held shares of Alphabet Inc (NASDAQ:GOOG)’s class C stock, with a total value of $14.23 billion, which tops the nearly $12 billion in class C shares held by 126 funds a quarter earlier.

Facebook Inc (NASDAQ:FB) is another long-term investment of Tiger Management, having been included in its 13F portfolio since the fourth quarter of 2013. At the end of September, Robertson held 197,500 shares of the social networking giant worth $25.33 million. It’s worth mentioning that Facebook ranked as the most popular stock among the billionaires in our database at the end of September, with 23 funds managed or founded by billionaires holding shares of the company, up by three over the quarter. Overall, it was the third-most popular stock, with 149 funds tracked by us having amassed $16.28 billion worth of its stock as of the end of the third quarter, trailing only Amazon and Alphabet. Facebook Inc (NASDAQ:FB)’s shares have done pretty well so far this year, advancing by over 17%. In the last couple of months, the company has made several disclosures involving errors in its traffic metrics. As Facebook’s platform has become the largest driver of traffic to news sites and there’s been a lot of noise around fake news stories, Facebook Inc (NASDAQ:FB) will have to take some steps to address these issues.

Last but not least, Priceline Group Inc (NASDAQ:PCLN) was represented in Tiger Management’s equity portfolio in the form of a $24.28 million stake that was initiated during the third quarter and contains 16,500 shares as of the end of September. Since the beginning of the fourth quarter, the stock has inched up by 2% and is up by over 20% year-to-date. Earlier this week, Priceline Group Inc (NASDAQ:PCLN) announced the appointment of a new CEO effective January 1. Glenn Fogel, the current Head of Strategy and Executive Vice President of Corporate Development, will replace interim CEO Jeff Boyd. Earlier this month CLSA analyst James Lee initiated coverage on Priceline’s stock with a ‘Buy’ rating and $1,900 price target, saying that the company is likely to increase its market share due to its advantages over competitors. Overall, it looks like smart money is also bullish on the company, with the number of funds in our database long Priceline Group Inc (NASDAQ:PCLN) having jumped by 13 to 98 during the third quarter, while the total value of their positions went up to $8.19 billion from $7.25 billion and represented 11.70% of the company’s outstanding stock at the end of September.

Disclosure: None