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Billionaire Julian Robertson’s Long Term Stock Picks

Billionaire Julian Robertson‘s hedge fund Tiger Management, disclosed an equity portfolio valued at some $509.8 million as of the end of 2014. The equity portfolio is mainly invested in Technology (25%), Consumer Discretionary (24%) and Health Care (21%) stocks. Tiger Management’s last 13F filing showed that the fund raised its exposure towards consumer discretionary and health care stocks, but Mr. Robertson reduced his holdings in the tech and industrials sector. Among 10 largest holdings from Tiger Management’s equity portfolio (which amass 70.15% of the total portfolio value), several companies represent long-term bets. Among these companies are Gilead Sciences Inc. (NASDAQ:GILD), Delta Air Lines Inc. (NYSE:DAL), and BioDelivery Sciences International Inc. (NASDAQ:BDSI).

Julian Robertson

In this article we will look into Mr. Robertson’s top three picks held at the end of 2014. Two of these companies are large-cap stocks, which is obvious to see why, since the majority of most popular stocks among the hedge funds that we track are represented by large-cap companies. However, mimicking the activity of these funds by investing in their large-cap picks is not the best strategy for retail investors, since our tests of a portfolio consisting of 50 most popular picks among hedge funds underperformed the market by 7.0 basis points per month between 1999 and 2012. On the other hand small-cap picks have a better chance of helping an investor to beat the market, since our small-cap strategy returned 132% since the end of August 2012 until March 2015.

In Gilead Sciences Inc. (NASDAQ:GILD), Tiger Management holds 533,911 shares, up by 21% on the quarter; the value of the stake amounts to $50.32 million. The famous investment guru initiated a stake in Gilead Sciences Inc. (NASDAQ:GILD) with 387,000 shares during the second quarter of 2013. It is important to mention that the stock gained about 26.9% during 2014. Moreover, as we analyzed the data from the latest round of 13F filings, Gilead Sciences ranked among ten most popular healthcare stocks among over 730 hedge funds that we track and was also one of the favorite healthcare stocks among billionaire investors.

The popularity of Gilead Sciences among investors seems obvious. The firm is a biopharmaceutical company, which discovers, develops, and commercializes medicines in North America, South America, Europe, and the Asia-Pacific. Gilead Sciences has good profit margins (net margin of 48.62% at the end of 2014), while is focusing on others high-margin markets. An example is the approval of hepatitis C drug Sovaldi during 2013. The results appeared quickly as Sovaldi and Harvoni reached $12.4 billion in sales in 2014. This level indicates that the $11 billion acquisition of Pharmasset was a good bet. Although the firm has a leading market position in treating HIV virus, competition never stops and it peers could introduce new products in the future.

For the fourth quarte of 2014 Gilead Sciences Inc. (NASDAQ:GILD) posted revenues of $7.3 billion compared to $3.1 billion for the fourth quarter of 2013. Along with this, earnings per share (EPS) have significantly increased in the fourth quarter of 2014 to $2.18 from $0.47 a year earlier. Among the funds that we track, the largest shareholder of Gilead Sciences Inc. (NASDAQ:GILD) is Cliff Asness’ AQR Capital Management, which upped its stake by 114% on the quarter to 4.83 million shares held as of the end of 2014.

Delta Air Lines, Inc. (NYSE:DAL) represents the second most valuable long term investment in Robertson’s portfolio. After an 18% increase in the company’s stake during the fourth quarter, the fund amounted to about 848,775 shares valued at $41.75 million. Mr. Robertson initiated a stake in the company during the third quarter of 2013 and for the most part since then, the investor has been trimming his stake. However, in the second half of 2014, the holding was increased. The crude oil reached a peak of $147 a barrel in July 2008 and now it is trading nearly $46 and this of course is crucial for the company for the cost incidence in the income statement. Due to a general improving global economy, the firm should benefit from a higher passenger demand. We look for business travel demand to improve throughout this year.

Lansdowne Partners held the highest number of Delta Air Lines, Inc. (NYSE:DAL) shares among the hedge funds that we track, its stake containing 23.11 million shares valued at about $1.14 billion. Moreover, Delta Air Lines is one of the favorite airline stocks among billionaire investors as we determined from data from the latest round of 13F filings.

Next in line is BioDelivery Sciences International Inc. (NASDAQ:BDSI). The fund held about 510,874 shares valued at $6.14 million at the end of the fourth quarter of 2014, while the stake was initiated in the last three months of 2013 and has been unchanged since then. With a market cap of $754.9 million, BioDelivery Sciences International Inc. (NASDAQ:BDSI) is up by 65.4% during the last 52 weeks, and gained 23% year to date. Healthcare focusef fund Broadfin Capital, led by Kevin Kother, held a stake of 2.39 million shares of BioDelivery Sciences International valued at $28.80 million, which was the largest holding among the hedge funds that we track.

Disclosure: none

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