Billionaire Chase Coleman‘s Tiger Global Management LLC recently released its 2016 second quarter investor letter, revealing the performance of its funds during that period. The Tiger Global (TGI) fund, which since inception has generated an average annual return of 18.3% (Net) and was down by 22.1% during the first quarter, managed to end the second quarter with a meager net gain of 0.8%. However, the onshore investors of its Tiger Global Long Opportunities (TGLO) fund were not as lucky. After losing 14.45% during the first quarter of 2016, the TGLO fund lost another 2.4% during the second quarter. Tiger Global is tackling its underperformance unflinchingly, expressing the following in its letter:
“At Tiger Global, two of our core cultural tenets are intellectual honesty and continuous improvement. We know there will be periods when we perform poorly and make mistakes, and we strive to be honest with ourselves and you, our investors, about what we have done well and what we have not. If there is a silver lining in negative performance, it is the opportunity to learn and improve. We believe that by continuously iterating, as we have in the past, we will become even stronger as an organization.”
According to Tiger Global’s 13F filing for the June 30 reporting period, its U.S. equity portfolio was worth $5.06 billion at the end of June, 27% less than what it was worth at the end of March. The filing also revealed that Tiger Global’s top-10 holdings accounted for almost 98% of its portfolio’s value and that a majority of those ten stocks were from the tech sector. In this article, we’ll see what Tiger Global had to say about some of its most prominent positions and discuss the 2016 performance of five key stocks in its portfolio.
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#5 Apple Inc. (NASDAQ:AAPL)
– Shares Owned by Tiger Global Management LLC (as of June 30): 5.66 Million
– Value of Holding (as of June 30): $616.58 Million
Tiger Global initiated its stake in Apple Inc. (NASDAQ:AAPL) during the final quarter of 2015, but has significantly reduced its holding in the company since then, bringing it down by 47% and 75% during the first and second quarters of 2016, respectively. The technology behemoth reported better than expected quarterly numbers last month, following which its stock has been on a consistent uptrend. Currently, investors and analysts are eagerly waiting for the company to launch the next iteration of its bestselling product, the iPhone, which is expected to be unveiled at an event next month. Although most analysts believe that the new iPhone models have the potential to bring the company back to solid growth, some of them think that, irrespective of the features or pricing of the new phones, Apple Inc. (NASDAQ:AAPL) will find it increasingly difficult to repeat the quarterly financial performances it has delivered in the past. On August 19, eminent tech analyst Gene Munster of Piper Jaffray released a note to his clients in which he reiterated his ‘Buy’ rating and $151 price target on Apple’s stock and also highlighted that “in the next three years, the area where Apple can make the most impactful improvement is in battery life.” David Einhorn‘s Greenlight Capital reduced its stake in Apple by 17% to 6.85 million shares during the second quarter.
#4 JD.Com Inc(ADR) (NASDAQ:JD)
– Shares Owned by Tiger Global Management LLC (as of June 30): 44 Million
– Value of Holding (as of June 30): $1.16 Billion
Though Tiger Global didn’t make any changes to its stake in JD.Com Inc(ADR) (NASDAQ:JD) during the second quarter, the holding dropping from second to fourth place in the fund’s portfolio in terms of value during the period, owing partially to the 20% drop in the stock during that time. While the stock has managed to recoup some of those second quarter losses following its latest earnings release, it is still trading down by 20% year-to-date. For the second quarter, JD.Com Inc(ADR) (NASDAQ:JD) reported EPS of $0.29 on revenue of $9.80 billion, crushing analysts’ consensus earnings estimate of a loss of $0.03 per share, and being in-line with revenue estimates of $9.81 billion. Earlier this year, the company acquired Wal-Mart’s Chinese online marketplace, Yihaodian, by offering 5% of its float to Wal-Mart Stores, Inc. (NYSE:WMT). However, analysts think that despite this partnership, JD.Com will find it increasingly difficult to compete against Alibaba Group Holding Ltd (NYSE:BABA), which has recently launched a major promotion in the hotly contested Chinese online grocery space. On August 13, analysts at Piper Jaffray reiterated their ‘Neutral’ rating and $27 price target on the stock. Philippe Laffont‘s Coatue Management reduced its stake in JD.Com by 8% to 19.7 million shares during the second quarter.
We’ll check out Tiger Global’s commentary and performance related to three more stocks on the next page.