Tiger Global Discusses Priceline, Charter, Q2 Performance

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.

#3 Priceline Group Inc (NASDAQ:PCLN)

– Shares Owned by Tiger Global Management LLC (as of June 30): 550,898

– Value of Holding (as of June 30): $710.08 Million

Moving on, Tiger Global increased its holding in Priceline Group Inc (NASDAQ:PCLN) by 36% during the second quarter. Shares of the online travel bookings company have remained range-bound for more than two years now. However, they are currently trading up by 11.08% in 2016. In its second quarter investor letter, Tiger Global mentioned that Priceline Group Inc (NASDAQ:PCLN) “benefits from low supplier concentration given the extremely fragmented hotel market globally and its relationships with over 800,000 hotels, vacation homes and urban residences.” Most analysts who cover the company share the same bullish views on it, owing to the rapid pace at which it is growing and the strong free cash flow it has been generating over the past several quarters. On August 18, analysts at Evercore ISI upgraded Priceline to ‘Buy’ from ‘Hold’ and also upped their price target on it to $1,650 from $1,360, which represents potential upside of 15.14%. Eduardo Costa‘s Calixto Global Investors initiated a stake in Priceline Group during the second quarter, purchasing 13,427 shares of the company.

#2 Charter Communications, Inc. (NASDAQ:CHTR)

– Shares Owned by Tiger Global Management LLC (as of June 30): 1.96 Million

– Value of Holding (as of June 30): $396.96 Million

After increasing its stake in Charter Communications, Inc. (NASDAQ:CHTR) by 181% during the first quarter, Tiger Global boosted it by a further 116% during the second quarter. In its investor letter, the fund mentioned that “Charter’s recently completed acquisition of Time Warner Cable will allow the company to implement its customer-focused strategy across Time Warner’s historically undermanaged business, resulting in meaningful improvements in revenue growth, EBITDA margins and free cash flow.” Tiger Global also revealed that based on the analysis it has done, the fund thinks that Charter Communications, Inc. (NASDAQ:CHTR)’s stock can double “in the next three to four years.” Shares of the cable giant recently experienced an upward surge after the company reported its second quarter financial results and are currently trading up by 11.09% year-to-date. Following the earnings release, analysts at Barclays reiterated their ‘Equal Weight’ rating on the stock on August 17, while upping their price target on it to $265 from $238, which represents potential upside of 5%. Stewart Strawbridge‘s Selkirk Management reduced its stake in the company by 4% to 50,000 shares during the second quarter.

#1 Amazon.com, Inc. (NASDAQ:AMZN)

– Shares Owned by Tiger Global Management LLC (as of June 30): 1.04 Million

– Value of Holding (as of June  30): $618.71 Million

An over 20% rise in its stock during the second quarter coupled with Tiger Global increasing its Amazon holding by 40% during the period pushed Amazon.com, Inc. (NASDAQ:AMZN) to the top spot in the fund’s portfolio at the end of June, from fourth at the end of March. Amazon.com, Inc. (NASDAQ:AMZN)’s stock has continued its rally in the third quarter and is currently trading up by 9.26% year-to-date. Led by the continued growth of its cloud platform AWS, Amazon.com again reported better than expected quarterly results recently. Although most analysts expect that AWS will continue its rapid growth, some are concerned that Microsoft Corporation (NASDAQ:MSFT)’s upcoming Azure Stack might prove to be tough competition to AWS and could snatch some of the latter’s market share. On August 16, Amazon.com’s Twitch division acquired Curse, a tech and multimedia company that focuses on content and products specifically for gamers, for an undisclosed sum of money. Currently, Amazon.com’s stock sports an average rating of ‘Buy’ and an average price target of $885.89 from the 43 leading analysts and research firms on Wall Street who track it. Billionaire Ken Fisher‘s Fisher Asset Management reduced its stake in the e-commerce giant by 21% to 1.98 million shares during the April-to-June period.

Disclosure: None